1. A bank offers a monthly interest rate of 1.78% compounded monthly. What is the nominal interest rate? Enter your answer as a percentage between 0 and 100.
2. A certificate of deposit (CD) offers a daily rate of 0.03% compounded daily. What is the effective annual rate of interest? You can assume 365 days per year. You should express your answer as a percentage between 0 and 100 rounded to the nearest tenth of a percent.
3. Republic Finance offers money at 0.93% per month compounded monthly. How many YEARS will it take for an investment to triple? (Your answer can be a decimal.)
4. "Bank A offers an interest of 4% compounded daily, while bank B offers continuous compounding at 3.87% APR. If you deposit $4,004 with each bank, what will be the difference in the two bank account balances after 5 years? Enter your answer as a positive number."
5. "An individual retirement account (IRA) offers a risk-free option with a nominal 5% interest rate, compounded monthly. You get paid two times per month (the 1st and the 15th of the month) and decide to invest $410 per pay period into the IRA. This is a situation where the payment periods occur more frequently than the compounding periods. Assume that interest is calculated only at the end of the month so that $410 invested at the beginning of the month earns the same amount of interest as $410 invested in the middle of the month. In other words, there is no benefit to investing $410 in the middle of the month versus the end of the month. With this assumption, what is the value of the IRA after 15 years?"
6. "Ms. Jones wants to buy a new car for $31,000. She will make a down payment of $15,500. She would like to borrow the remainder from a bank at an interest rate of 7.1% compounded monthly. She agrees to pay off the loan monthly for a period of 2.5 years. Assume that Ms. Jones has made 12 payments and wants to figure out the balance remaining immediately after the 12th payment. Determine the remaining balance."
7. "An individual retirement account (IRA) offers a risk-free option with a nominal 3% interest rate, compounded monthly. You get paid two times per month (the 1st and the 15th of the month) and decide to invest $520 per pay period into the IRA. This is a situation where the payment periods occur more frequently than the compounding periods. Assume that a deposit starts to earn interest whenever the deposit is made, so that there are 0.5 interest periods per payment period. With this assumption, what is the value of the IRA after 15 years? HINT: The assumption allows you to know the value of C, and you should be able to find the value of K based on C."