GENERAL INSTRUCTIONS: 1. Exercises to be done individually. So you can demonstrate mastery of the material. 2. Write the formula used and its development. 3. Use four decimal places. Convert to dollars and cents, or %, whichever was the answer requested. 4. Emphasize by circling (or otherwise) the answer, for each required, if there is more than one.

I. SIMPLE INTEREST:

1. What is the amount and the accrued simple interest of $18,750; at 6.585% for a period of seven years and ten months?

2. Find the difference between exact simple interest and ordinary simple interest when calculating $15,780 at 8.655% for 60 days?

3. If you deposited $48,250 at what %, would you accumulate an amount of $67,156.25 in seven years?

II. COMPOUND INTEREST: (annual and parts of the year)

1. Find the amount and compound interest of $75,520 at 5 1/8% for a period of 10 years calculated:

to. annually b. semi-annually c. quarterly basis d. monthly and. continually

2. How much money do you need to deposit in your investment account? to have $100,000 after twenty-five years at 5.45% interest calculated annually?

III. PRESENT VALUE AND OTHERS:

1. Find the net present value of an inheritance to be received in 15 years of $80,125 discounted today at 4 5/8%.

2. If you accept the answer to #1 above, what or more interest would be accepted today to reach $135,000 in 20 years.

3. The property you bought 16 years ago for $175,000 is worth $210,500 today. What is the rate of return on your investment?

4. Joe Doe deposited $25,500 into his savings account. The interest rate is 5% compounded annually. How many years will it take for the investment to reach $75,000?

5. You have deposited $200,000 in stock investments, after three years, the balance of the investment is $180,900. What and how much has been the rate of return?

IV. ANNUITIES:

1. If you and your partner decide to open an IRA account of $4,800 per year each. You are offered 5 % annual interest for 30 years. What will be the amount and accrued interest of the annuity?

V. PRESENT VALUE OF AN ANNUITY:

1. You are lucky to hit the Lotto. The prize is 2 million. You have the option of (1) receiving a single amount one time, (2) receiving an identical annuity each year, for 20 years. Ignore the tax. Discount rate 4.5% 1. What is the present value of option (1)? 2. What is the present value of option (2)? 3. which one would you select and why?