1. Calculate the simple interest in each situation.

A) $1000 invested at 3%/a for 8 years

B) $5500 invested at 2.5%/a for 42 months

C) $1000 borrowed at 5%/a for 150 days

Your parents purchased a house for $120,000. After 22 years the house had doubled in value. What was the simple interest rate that could generate this return on their investment?

1. Calculate the amount for each section using compound interest.

A) $1000 invested at 3%/a compounded semiannually for 8 years

B) $5500 invested at 6%/a compounded monthly for 42 months

C) $1000 borrowed at 5%/a compounded quarterly for 5.5 years

Your parents purchased a house for $120,000. After 12 years the house had doubled in value. What was the interest rate that could generate this return on their investment if the rate were compounded semiannually? (Hint: the 24th root is equal to an exponent of 1/24)

1. Calculate the present value for each section using compound interest.

A) You need $1,000 in 8 years. You can invest your money at 3%/a compounded semiannually.

B) You need $200 in 30 months. You can invest your money at 6%/a compounded monthly.

C) You need $15,000 in 12.5 years. You can invest your money at 4%/a compounded quarterly.

You wish to purchased a house for $120,000 in 12 years. You can invest your money at 4.5%/a compounded semiannually for the first 5 years and then you can get 6%/a compounded semiannually for the next 7 years. How much do you need to invest now? (Hint: start with the last 7 years)

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