Problem Set: Interest Calculations Section 1 : Simple Interest 1 . A bank offers a simple interest rate of ( mathbf { 6
Problem Set: Interest Calculations Section : Simple Interest A bank offers a simple interest rate of mathbf per year. If you invest mathbf$ for mathbf years, how much total interest will you earn? John took a loan of mathbf$ at a simple interest rate of mathbf per annum for mathbf years. Calculate: The total interest paid The total amount to be repaid at the end of years If a person deposits $ in a savings account that earns mathbf simple interest annually, how many years will it take for the investment to grow to mathbf$ A loan of mathbf$ accrues mathbf$ in simple interest over mathbf years. Determine the annual interest rate. Section : Nominal and Effective Interest Rates A bank advertises a nominal interest rate of mathbf per annum, compounded quarterly. Find the effective annual interest rate EAR If the nominal interest rate is mathbf per year and is compounded semiannually, calculate the effective annual rate EAR Find the nominal annual interest rate if the effective annual rate is mathbf compounded quarterly. A credit card company charges an mathbf nominal annual interest rate, compounded monthly. What is the effective annual interest rate EAR Section : Application and Word Problems A bank offers two investment options: Option A: simple interest per year Option B: annual interest compounded quarterly If you invest $ in each for mathbf years, which option gives you more money at the end? Maria invested mathbf$ at an mathbf nominal interest rate, compounded monthly. After mathbf years, how much will her investment be worth? A businessman borrows $ at a mathbf nominal interest rate, compounded semiannually for mathbf years. Calculate the total amount he will have to repay at the end of the loan period. An investor wants to deposit money into an account offering a nominal rate of mathbf compounded monthly. How long will it take for the investment to double?
