138 Chapter 3 Compound Interest
- Deidre borrowed $1,236.95 for 14 months at an interest rate of 9.2% compounded daily. Find the payoff amount for
the loan. - The State of Wyoming issued a $50,000 face value discount bond that matures on July 1, 2007. Pike Capital Corp
bought this note for $48,359 on November 18, 2006. Find the simple interest rate and the simple discount rate. - Harry has a store charge account on which the effective interest rate is 21.6%. Suppose he charges a new stereo for
$750, and makes no payments for 10 months. (a) How much will he owe at the end of the 10 months? (b) Suppose
instead that he forgets about the account and moves to a monastery in Nepal (where the store’s collection department
can’t fi nd him) and returns 12 years later. How much will he owe when he returns? - Vladimir opened a savings account with a deposit of $3,279.14 at an interest rate of 7.2% compounded daily. The
account remained open for 2 years, 3 months, and 17 days, during which time he made no deposits or withdrawals.
How much was the account worth at the end when it was closed? - Jacqui borrowed $575.00 for 1 year and 7 months at an interest rate of 6.3% compounded monthly. How much did she
have to repay? - Find the effective interest rate equivalent to 3.59% compounded (a) daily, (b) monthly, (c) quarterly, (d) semiannually,
and (e) annually. - Which of the following fi nancial institutions is offering the best rate for a certifi cate of deposit?
Bank Rate Compounding
Naples Savings and Trust 9.55% Annually
National Bank of Cohocton 9.35% Quarterly
Springwater Savings Bank 91 ⁄ 4 % Daily- Find the effective rate equivalent to 7.17% compounded annually.
- How much would I need to deposit at 5.22% compounded daily for an investment to grow to $35,000 in
30 years? - Find the future value of $478,923 in 5 years, given an APY of 9.12%.
- Lois deposited $1,375.29 in a savings account that paid 4.79% compounded daily for 300 days. Would she have been
better off if she had earned a 4.87% effective rate? Justify your answer.