NAME _________________________________________________
1. Assume that a 30-month CD purchased for $3000 pays simple interest at an annual rate of 5.5%. How much total interest does it earn? What is the balance at maturity?
2. Assume that a one year CD purchased for $2000 pays an APR of 8% that is compounded quarterly. How much is in the account at the end of each compounding period? How much total interest does it earn? What is the APY?
3. You borrow $18,000 with a term of 4 years at an APR of 5% to buy a car? What is your monthly payment? What is the total interest paid?
4. You discover that for a 30-year home mortgage the APR is 6.5%. Based on your income you can only afford a monthly payment of at most $750. How much can you borrow?
5. You want to save $20,00 for a down payment on a home by making regular monthly deposits over 5 years. Suppose the APR = 6%. How much money must you deposit each month?
6. You begin working at age 25 and your employer deposits $250 each month into a retirement account that pays an APR of 6% compounded monthly. You plan to retire at age 65. What will be the size of your nest egg when you retire?
7. You have a balance of $1000 on your Visa credit card. Assume that you make no additional charges on the card and the card charges 9.9% APR and requires a minimum payment of 3% of the balance. Assume that you make only the minimum payments. Find a formula for the balance after t monthly payments. Find how many months it takes to bring the balance under $50.
8. You have a balance of $400 on your credit card and make no more charges. Assume the card carries an APR of 18%, Suppose you want to pay off the card by making equal size payments over 6 months. What is the monthly payment?
9. Suppose that the buying power of a dollar went down by 60% over a period of time. What is the rate of inflation during that period?
10. Determine the tax if a flat tax of 15% is applied to an income of $400,000.