Copyright © 2008, The McGraw-Hill Companies, Inc.
- Heather bought a new dining room set from a furniture store that was offering a special “make no payments and pay
no interest until 2010!” promotion. Even though she could pay for the furniture up front, she fi gured that she might as
well take advantage of the offer, put the money in a CD, and earn some interest until she has to pay up. The last day
that she can pay off the furniture without being hit with interest is 2 years, 7 months, and 3 days away. The furniture
cost $3,007.79, and her bank will pay an interest rate of 4.76% compounded daily (bankers’ rule) for the CD. How
much does she need to deposit in order to have the right amount when the time comes?
F. Grab Bag- Find the total interest earned in 5 years on a deposit of $83,000 at 7.5% compounded daily.
- How much should I deposit in an account today in order to have the value grow to $18,000 in 5 years, assuming the
account earns 5.37% compounded quarterly. - Interest compounds on my savings account daily. What interest rate would I need to earn in order to double my
account’s value in 10 years? - Find the future value of $1,735.12 at 3.75% compounded monthly for 20 years.
- Trevor invested $32,500 in a 30 month certifi cate of deposit which paid 4.63% compounded monthly. How much
interest did he earn? - Keitha invested $24,915 in a 30-month certifi cate of deposit that paid 5.07% compounded daily (bankers’ rule). How
much interest did she earn? - Cherise deposited $1,955.19 at 6% interest compounded daily for 7 years. How much more did she earn than if the
interest had compounded quarterly? - Use the Rule of 72 to approximate how long it would take me to double my money if I can earn 5.85% compounded
daily. - Shimura-Taniyama Corp. invested $475,000, which earned 5^5 ⁄ 8 % interest compounded daily for 4 years, 8 months,
and 17 days. Can you determine the exact amount of interest the company earned? If so, fi nd it. If not, calculate a
reasonable approximation of the amount. - Find the future value of $13,355.09 at 7.07% compounded monthly for 5 years.
- Find the future value of $13,355.09 at 7.07% compounded monthly for 60 months.
Exercises 3.2 113