Name: __________________________
Part I
For Part I of this assignment you must show all of your work and identify your variables
for each question. NO GRAPHING CALCULATORS
THE BASICS
1. Express each percent interest rate as a decimal number. [8 K]
5%
15%
4.5%
7.25%
0.5%
0.38%
25.5%
10.125%
2. Express each time period in years. [8 K]
3 months
42 months
75 months
18 weeks
200 weeks
150 days
1000 days
3 days
SIMPLE INTEREST
1. Rearrange the Simple Interest Formula (I = Prt) to solve for each of the variables indicated below: [3 K]
P=
r=
t=
2. What does each variable in the simple interest formula (I = Prt) represent? [4 C]
I:
P:
r:
t:
Name: __________________________
***FOR QUESTIONS 3 – 8 please IDENTIFY EACH VARIABLE before solving***
3. If $5,000 is invested for 7 years at 6.5% interest:
a) How much interest is earned? [4 K]
b) What is the total value of the investment after 7 years? [1 K]
4. If a $6,200 investment earns $2,015 in interest over a period of 5 years, what was the simple interest rate on
the investment? Express as a percent! [3 A]
5. If an investment earns $1,231.25 in interest over a 10 year period invested at 1.25% simple interest, what was
the value of the original investment? [3 A]
6. If an $1,800 investment earns $4,320 in interest at 12% simple interest, how long was the money invested?
[3 A]
7. If a $10,000 investment grows to $12,000 in 30 months, what percent interest was the investment earning?
[5 A]
Name: __________________________
COMPOUND INTEREST
n
1. What does each variable in the compound interest formula [A = P(1 + i) ] represent? [4 C]
A:
P:
i:
n:
2. Fill in the table below. [8 K]
Compounding
Schedule
Compounding Periods
Per Year
Daily
52
Bi-Weekly
24
Monthly
4
Semi-Annually
1
3. Calculate “i” as it would appear in the compound interest formula for each situation. [8 A]
Each situation gives the interest rate and the compounding schedule. SHOW YOUR CALCULATIONS!
a) 8% bi-weekly
b) 2.5% annually
c) 16.2% quarterly
d) 0.5% semi-annually
e) 15% daily
f) 10% weekly
g) 1.9% semi-monthly
h) 3.25% monthly
Name: __________________________
4. Explain how you find the value of “i” in the compound interest formula. [2 C]
5. Calculate “n” as it would appear in the compound interest formula for each situation. [8 A]
Each situation gives the compounding schedule and the time of the investment. SHOW YOUR CALCULATION!
a) bi-weekly for 3 years
b) annually for 9.5 years
c) quarterly for 36
months
d) semi-annually for 30
years
e) daily for 13 weeks
f) weekly for 7.25 years
g) semi-monthly for 18
months
h) monthly for 500 days
6. Explain how you find the value of “n” in the compound interest formula. [2 C]
***FOR QUESTIONS 7 – 8 please IDENTIFY EACH VARIABLE before solving***
7. If $5,000 is invested at 5% interest compounded monthly, how much is the investment worth after 15 years?
BE SURE TO LIST AND IDENTIFY EACH VARIABLE BEFORE SOLVING [6 A]
8. If $100,000 is invested at 8.25% interest compounded daily, what is the investment worth after 30 years?
BE SURE TO LIST AND IDENTIFY EACH VARIABLE BEFORE SOLVING [6 A]