I. A student deposits $1,000 in a savings account with an interest rate of 4.25%
ID: 1142956 • Letter: I
Question
I. A student deposits $1,000 in a savings account with an interest rate of 4.25%. How much interest will be gained at the end of one year? a. $43 b. $23 c. $59 d. $4 2. You borrow $2,000 from a bank at 9% interest. How much money would you save if the interest were simple interest rather than compound interest? Figure the amounts for 4 years a. $196 b. $103 c. $720 d. $500 A small business owner deposits $3,000 in the bank. At the end of one year, he withdraws the whole amount of $3,200, What was his rate of return? a, b. 9% 13% 7% c. d. 2% How much money should be deposited, for the next 6 years, to have $8,000 at the end of the 6 years at an interest rate of 8% per year? a. $2,14:2 b. $1,091 c. $863 d. $392 5. A company guarantees that all new employees l get a bonus of S700 in year1 and amounts increasing by $50 each year. What is the present worth of the bonuses for 6 years, if the interest rate is 6% per year? a. $1,600 b. $5,500 c. $7,150 d. $4,015 6. You plan to invest your bonus (at the end of this year) of $3,500 into a business that is guaranteed to make 12% per year. What will be the present worth of 3 years' worth of investments if the amount of your bonus increases by 10% each year? a. $9,200 b. $6,100 c. $8,400 d. $12,200 7. The amount of money a person must deposit 3 years from now in order to be able to withdraw S10,000 per year for 10 years beginning 15 years from now at an interest rate of 11% per year is closest to: a. b. c. d. P-10,000( P/A,11%,10) (P/F, I 1%12) P 10,000(P/A,11%,10)(P/F, 1 1%) 1) P-10,000( P/A, 1 1%. I l)(P/F,11%)2) P-10,000( P/A, l 1%, l l)(P/F,11%) 1)Explanation / Answer
1. We want to calculate the interest on $1000 at 4.25% interest/year after 1 year.
The formula we'll use for this is I=P*r*T
Where:
Hence SI is 43 (OptionA):