Objectives:
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Vocabulary:
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Formulas:
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Possible
Classroom Examples:
- Find the periodic rate that corresponds to 12% annual interest compounded
- quarterly
- monthly
- daily
- biweekly
- semi-monthly
- Find the number of periods that corresponds to
years if a period is a
- quarter of a year
- month
- day
- Find the future value of $7,300 at 7% compounded annually for 13 years.
- Find the future value of $12,350 at 6% compounded daily for 10 years.
- Find the annual yield corresponding to
compounded quarterly
compounded daily
- Find the present value
that will generate $1000 at 8% compounded annually for 7 years.
- National Trust Savings offers 5-year CDs at 8.25% compounded daily, and the Bank of the Future offers 5-year CDs at 8.28% compounded annually. Compute the annual yield for each institution and determine which is more advantageous for the consumer.
- When Alan Cooper was born, his grandparents deposited $5,000 into a special account for Alan’s college education. The account earned 7 ¼ % interest compounded daily.
- How much will be in the account when Alan is eighteen?
- If, on becoming eighteen, Alan arranged for the monthly interest to be sent to him, how much would he receive each 30-day month?
- David Murtha wants to have an IRA that will be worth $150,000 when he retires at age sixty-five.
- How much must he deposit at age twenty-six at
compounded daily? - If, at age sixty-five, he arranges for the monthly interest to be sent to him, how much will he receive each 30-day month?
© 2007 Elizabeth E. K. Jones and the
ASU
Department of
Mathematics and Statistics - All rights reserved.