- LOAN APPLICATIONS Complete the following
loan application. - LOW-INTEREST LOANS An underdeveloped
country receives a low-interest loan from a bank
to finance the construction of a water treatment
plant. What must the country pay back at the end
of years if the loan is for $18 million at 2.3%
simple interest? - REDEVELOPMENT A city is awarded a low-
interest loan to help renovate the downtown business
district. The $40-million loan, at 1.75% simple
interest, must be repaid in years. How much
interest will the city have to pay?
A calculator will be helpful in solving the following problems.
- COMPOUNDING ANNUALLY If $600 is invested
in an account that earns 8%, compounded annually,
what will the account balance be after 3 years? - COMPOUNDING SEMIANNUALLY If $600 is
invested in an account that earns annual interest of
8%, compounded semiannually, what will the account
balance be at the end of 3 years? - COLLEGE FUNDS A ninth-grade student opens a
savings account that locks her money in for 4 years at
an annual rate of 6%, compounded daily. If the initial
deposit is $1,000, how much money will be in the
account when she begins college in 4 years? - CERTIFICATE OF DEPOSITS A 3-year certificate
of deposit pays an annual rate of 5%, compounded
daily. The maximum allowable deposit is $90,000.
What is the most interest a depositor can earn from
the CD? - TAX REFUNDS A couple deposits an income tax
refund check of $545 in an account paying an annual
rate of 4.6%, compounded daily. What will the size of
the account be at the end of 1 year?
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Loan Application Worksheet- Amount of loan (principal) _____
- Length of loan (time) __
- Annual percentage rate ____
- Interest charged __
- Total amount to be repaid __
- Check method of repayment:
1 lump sum monthly payments
Borrower agrees to pay ______ equal
payments of __________ to repay loan.$810.009 mos.12%9(simple interest)- INHERITANCES After receiving an inheritance of
$11,000, a man deposits the money in an account
paying an annual rate of 7.2%, compounded daily.
How much money will be in the account at the end of
1 year? - LOTTERIES Suppose you won $500,000 in the
lottery and deposited the money in a savings account
that paid an annual rate of 6% interest, compounded
daily. How much interest would you earn each year? - CASH GIFTS After
receiving a $250,000
cash gift, a university
decides to deposit the
money in an account
paying an annual rate
of 5.88%, compounded
quarterly. How much
money will the account contain in 5 years? - WITHDRAWING ONLY INTEREST A financial
advisor invested $90,000 in a long-term account at
5.1% interest, compounded daily. How much money
will she be able to withdraw in 20 years if the
principal is to remain in the account? - LIVING ON THE INTEREST A couple sold their
home and invested the profit of $490,000 in an
account at 6.3% interest, compounded daily. How
much money will they be able to withdraw in 2 years
if they don’t want to touch the principal?
WRITING- What is the difference between simple and compound
interest? - Explain this statement:Interest is the amount of
money paid for the use of money. - On some accounts, banks charge a penalty if the
depositor withdraws the money before the end of the
term. Why would a bank do this? - Explain why it is better for a depositor to open a
savings account that pays 5% interest, compounded
daily, than one that pays 5% interest, compounded
monthly.
REVIEW- Evaluate: 72. Evaluate:
- Add: 74. Subtract:
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7
2
5
3
7
2
5
a1
4
b2
B1
4
6.5 Interest 569- Multiply: 76. Divide:
- Evaluate: 62 78. Evaluate:(0.2)^2 (0.3)^2
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