Lab 8

1) Bradley invested an amount of $12,000 in a mutual fund. After 2 years and 6 months the accumulated value of his investment was $13,141.08. What is the quarterly compounded nominal interest rate of the investment?

2) If $13,376.39 was the interest earned on lending $89,400.00 for 5 years, what was the quarterly compounding nominal interest rate charged on the loan?

3) Joel heard that he could triple his money in 27 years if he invested it in his friend's telecommunications business. What nominal interest rate compounded monthly does the business offer?

4) Steven received an excellent interest rate for his loan of $9,500. Calculate the nominal interest rate compounded semi-annually if the loan accumulated to $10,084.05 in 6 years and 6 months.

5) If an investment grew to $15,000 in 2 years and the interest amount earned was $1,050, calculate the nominal interest rate compounded quarterly.

6) How long did it take for an investment of $26,250 to grow to at least $33,000 at 2.43% compounded semi-annually?

7) Hewlett Plastics Inc. received a loan of $49,000 at 3.50% compounded quarterly to purchase machinery for its factory. Calculate the time period of the loan if the total interest paid was $21,648.85.

8) How long would it take for an investment to at least double its original amount at 3.92% compounded monthly?

9) Calculate the effective interest rate for each of the following nominal interest rates:

a.3.48% compounded quarterly.

b.3.48% compounded monthly.

10) Mary invested $225,000 to purchase a home. After 11 years, he sold the home for $300,000. Calculate the effective interest rate earned on this investment.

11) Find the equivalent interest rates for the following:

a.Nominal interest rate compounded quarterly that is equivalent to 4.5% compounded semi-annually.

b.Nominal interest rate compounded monthly that is equivalent to 3.8% compounded quarterly.

c.Nominal interest rate compounded semi-annually that is equivalent to 5.1% compounded quarterly.

12) A bank has decided to set its interest rates to compound monthly on all deposits in order to give customers the same benefits as its current offering of 5.07% compounded quarterly. At what value should the monthly compounded interest rate be set?

13) What nominal interest rate compounded semi-annually is equivalent to 4.50% compounded quarterly?

14) Calculate the time period of an investment in a mutual fund that matured to $61,406.28 yielding interest of $13,393.12 at 9.36% compounded monthly.

15) Calculate the following:

a.What interest rate compounded monthly is equivalent to 2.00% compounded quarterly?

b.What interest rate compounded semi-annually is equivalent to 5.75% compounded monthly?