Pre-Calculus
Unit 5 WS 5-6: Applications Day 1
Name:
A = Pert
Interest Formulas:
n
If a bank compounds at set intervals, fill in the data table for what value of "n" you would use for each
interval:
Interval
Annually
Semi-annually
Quarterly
Monthly
Bi-monthly
Daily
Value of "n"
I
2.
4
il
*4
ik£
1. Given that an investor has an initial investment of $4000. Calculate the final amount of his money if
invested at 6% interest rate for 5 years if compounded quarterly? Do the same calculation if compounded
continuously? Show work!!
2. Johnny invested money for his son's college. He put $4500 when his son was born. The bank pays
3.5% interest and compounds monthly. How much money will Johnny have for his son when he
graduates at age 18?
3. A deposit of $5,000 is made to a trust fund that pays 7.5% interest compounded continuously. It is
specified that the balance will be given to the college from which the donor graduated after the money has
earned interest for 50 years. How much will the college receive? (5 pts)
4. John wants to invest his money in a bank that compounds continuously at 5% interest rate. How long
will he need to keep his money in the bank to triple his money?
5. Sarah has been reading about U.S Savings bonds in the early 1980's. At that time an investor could
buy a US bond and double the money in 7 years. Today, she knows a bank compounds their interest
monthly and pays 7% interest rate. Will this bank double her money in 7 years? If not, how long will it
take?
v
6. The population P, in millions, in Russia from 1996 to 2004 can be approximated by the
Model: P = 152.26e"°'0059t, where t represents the year, with t = 6 corresponding to 1996.
a.
According to the model, is the population of Russia increasing or decreasing?
b.
What will the population be today in the year 2011?
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