Scribd
Upload
38 views2 pages

Financial Calculations for Investments and Loans

The document contains 8 word problems involving compound interest calculations. The problems provide initial deposits or desired future amounts with interest rates and time periods. The goal is to calculate the future values of deposits or amounts needed today to reach a future goal.

Uploaded by

Frances Megan Cruz
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
38 views2 pages

Financial Calculations for Investments and Loans

The document contains 8 word problems involving compound interest calculations. The problems provide initial deposits or desired future amounts with interest rates and time periods. The goal is to calculate the future values of deposits or amounts needed today to reach a future goal.

Uploaded by

Frances Megan Cruz
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

1.

Lorna Ray, owner of a Starbucks franchise, loaned $40,000 to Lee Reese to help him
open a new flower shop online. Lee plans to repay Lorna at the end of 5 years with 4%
interest compounded semiannually. How much will Lorna receive at the end of 5 years?

2. Joe Beary wants to attend Riverside College. Eight years from today he will need
$50,000. If Joe’s bank pays 6% interest compounded semiannually, what must Joe
deposit today to have $50,000 in 8 years?

3. Shelley Katz deposited $30,000 in a savings account at 5% interest compounded


semiannually. At the beginning of Year 4, Shelley deposits an additional $80,000 at 5%
interest compounded semiannually. At the end of 6 years, what is the balance in Shelley’s
account?

4. Earl Miller, owner of a Papa Gino’s franchise, wants to buy a new delivery truck in 6
years. He estimates the truck will cost $30,000. If Earl invests $20,000 now at 5%
interest compounded semiannually, will Earl have enough money to buy his delivery
truck at the end of 6 years?
5. Minnie Rose deposited $16,000 in Street Bank at 6% interest compounded quarterly.
What was the effective rate (APY)? Round to the nearest hundredth percent.

6. Lou Cavalier, owner of Cavalier Lube, estimates that he will need $70,000 for new
equipment in 7 years. Lou decided to put aside money today so it will be available in 7
years. Reel Bank offers Lou 6% interest compounded quarterly. How much must Lou
invest to have $70,000 in 7 years?

7. Bernie Long wants to retire to California when she is 60 years of age. Bernie is now 40.
She believes that she will need $900,000 to retire comfortably. To date, Bernie has set
aside no retirement money. If Bernie gets 8% compounded semiannually, how much must
Bernie invest today to meet her $900,000 goal?

8. You discover a savings account belonging to your great-grandmother. It has been earning
3
1 4 % annually for 50 years. The balance is $35,712. How much money did your
great-grandmother originally put in the account, to the nearest dollar?

You might also like