Unit 4 Financial Maths

The compound interest, to the nearest dollar, on $1000 over a period of four years at an interest rate of 5.3% compounded annually is:

• $212

• $229

• $232

• $530

• $1229

Emily’s parents put $1,500 in her bank account for college tuition. At an interest rate of 8.25% compounded semiannually,what will be the balance after 18 years?

• $6,273.50  frustrated
• $6,314.08 bewildered
• $6,385.72         pleased
• $6,427.94           tickled pink

Given an investment of $1,500:
Which investment would have a larger balance after 5 years?
Option 1 - 4% compounded monthly
Option 2 - 3.9% compounded daily. 

• Option 1
• Option 2

You want to save $5,000 for future family vacation.  If the bank pays 4.3% compounded monthly for 3 years, then how much will you need to invest to reach your vacation goal?  

• $307,042,791
• $5,000
• $3,250
• $4,395.89

A loan is modelled by the recurrence relation  $V_{n+1}=V_n\times1.007-400$  where  $V_n$   is the balance of the loan after n payments and  $V_0=25000$  . What is the balance of the loan after four payments?

• $24 775

• $24 091

• $25 575

• $27 324

Cynthia invested $2,000 at 4% annually for 10 years. Every year she deposited $2,000 into the account. What is her future value after 10 years?

• $44,512.78

• $24,512.78

• $24,512.19

• $24,012.22

Seth financed a purchase of a used car for $6,750. He has a four-year loan at 7.125% annual interest rate, compounding monthly, with monthly payments of $162.03. For his first monthly payment, calculate the amount that was paid in interest.

What is the effective annual rate for China Bank if they offer 2.5% per annum compounded semi-annually for a savings deposit?

• 2.53%

• 2.52%

• 2.50%

• 2.51%

Levi Bongosia plans to open a saving account in Maasin City. The 4 banks offers the following rates:

-China Bank offers 0.25% per annum compounded semi-annually

-BDO offers 0.25% per annum compounded monthly

-BPI offers 0.25% per annum compounded annually

-Metro Bank offers 0.25% per annum compounded quarterly

If you were Levi, which bank will you choose?

• 
• 
• 
• 

Approximately what interest rate would be needed in order to grow an investment of $1,400 to $2,500 in 10 years if the interest was compound monthly?

• 5.96%
• 5.84%
• 5.81%
• 5.88%