Name

Date Pd

Wheres my money at?

r A = P1 + n
nt

A = Amount (balance) in account P = Principal (amount deposited) in account r = rate of interest earned by account n = number of times per year interest is compounded t = amount of time money is in account

1) You deposit $500 into a savings account for three years. The account pays 5% annual interest, compounded monthly. Determine the balance in your account after 3 years. a) What is the value of P? __________ b) What is the value of r? __________ c) What is the value of n? __________ d) What is the value of t? __________ e) What is the account balance after 3 years? __________

2) $1200 is deposited in an account that pays 6% annual interest, compounded quarterly. Find the balance after five years.

3) $2000 is deposited in an account that pays 7% annual interest, compounded annually. Find the balance after ten years.

4) You deposit $2500 in a bank that pays 4% interest compounded monthly. Determine the balance after 5 years. Determine the balance after 10 years.

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Date Pd

5) You deposit $1600 in a bank account. Find the account balance after 3 years for each of the following situations: a) The account pays 2.5% annual interest compounded monthly.

b) The account pays 1.75% annual interest compounded quarterly.

c) The account pays 4% annual interest compounded yearly.

8) The Houston Astrodome was the first baseball and football stadium to be completely enclosed. It was completed in 1965 at a cost of 45.35 million dollars. Construction costs have increased by approximately 6% each year since 1965. How much would it cost to build the Astrodome today?

7) How much must you deposit in an account that pays 6% interest, compounded semi-annually, to have a balance of at least $5000 in 15 years?

6) You want to have approximately $2500 in the bank after 2 years. Find the amount you should deposit for each of the situations described below. a) The account pays 2.25% annual interest compounded monthly.

b) The account pays 2% annual interest compounded quarterly.

c) The account pays 5% annual interest compounded yearly.

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Date Pd

9) You deposit $1000 in an account that earns 2.5% annual interest. Find the balance after 3 years if this interest is compounded with the given frequency. a) Monthly b) Daily

10) In 1990, the tuition at a private college was $15,000. During the next 9 years, tuition increased by about 7.2% each year. a) Write an equation to represent the cost of tuition at the college t years after 1990. b) Estimate the year when the tuition was $20,000.

c) Estimate the tuition in 2010. 11) You recently received $800 for your birthday and you have decided to invest it for six years. You want to earn the most money possible so you visit all of the banks in the area. Determine which bank will give you the best investment with your money.

3% annual interest compounded quarterly

2.5% annual interest compounded monthly

4.75% annual interest compounded annually

1.5% annual interest compounded daily