Problem 1: One hundred dollars of interest is paid each month on an investment of $10,000. If interest is compounded monthly, the accumulation at the end of two years is equal to ____________.
A. $12,400
B. $12,700
C. $12,544
D. $12,400
Problem 2: An individual wishes to deposit an amount of money now to have an accumulation of $500 at the end of five years. If the interest rate is at 4% per year, compounded semiannually, determine how much should be deposited now?
A. $337.80
B. $740.00
C. $410.15
D. $454.54
Problem 3: An individual wishes to deposit a sum of $10,000 now and $5,000 three years from now in the same account. Determine the accumulated amount at the end of 10 years if the interest rate is 8% per year, compounded quarterly.
A. $33,780
B. $48,095
C. $41,017
D. $30,785
Problem 5: How many years will it take for an amount "X" to double if invested at an interest rate of 10% compounded annually? [Hint: in your derivation use the fact that ?ln?(X?^n)=n×ln?(X)]
A. 7.27
B. 8.61
C. 6.7
D. 9
Problem 6: Ross Machine Company in Smithville, Tennessee is considering buying a "CNC Machining Center" for its machining department. The cost of the machine is $60,000. A down payment of $20,000 is required by the machine tool builder and the loan balance will be paid in 5 equal yearly payments. The machine tool builder expects Ross Machine Company to pay the interest on the unpaid balance with each of the payments. If the machine builder charges an interest of 10% per year, develop a loan repayment schedule for this loan.