![Page 1: Section 5.1 Simple and Compound Interest 2017(5003) mathematics...Section 5.1 Simple and Compound Interest Page | 4 Example 4. Suppose $1000 is deposited for 6 years in an account](https://reader034.vdocuments.net/reader034/viewer/2022042612/5f5246211fe5147e426a8bb5/html5/thumbnails/1.jpg)
Section 5.1 Simple and Compound Interest Page | 1
Section 5.1
Simple and Compound Interest
![Page 2: Section 5.1 Simple and Compound Interest 2017(5003) mathematics...Section 5.1 Simple and Compound Interest Page | 4 Example 4. Suppose $1000 is deposited for 6 years in an account](https://reader034.vdocuments.net/reader034/viewer/2022042612/5f5246211fe5147e426a8bb5/html5/thumbnails/2.jpg)
Section 5.1 Simple and Compound Interest Page | 2
Example 1. To buy furniture for a new apartment, Pamela Shipley borrowed $5000 at 8%
simple interest for 11 months. How much interest will she pay?
Example 2. Find the Future (maturity) value for each loan at simple interest.
(a) A loan of $2500 to be repaid in 8 months with interest of 4.3%.
(b) A loan of $11,280 for 85 days at 7% interest.
![Page 3: Section 5.1 Simple and Compound Interest 2017(5003) mathematics...Section 5.1 Simple and Compound Interest Page | 4 Example 4. Suppose $1000 is deposited for 6 years in an account](https://reader034.vdocuments.net/reader034/viewer/2022042612/5f5246211fe5147e426a8bb5/html5/thumbnails/3.jpg)
Section 5.1 Simple and Compound Interest Page | 3
Example 3. Alicia Rinke wants to borrow $8000 from Robyn Martin. She is willing to pay
back $8180 in 6 months. What interest rate will she pay?
Compound annually: 𝑚 = 1, so 𝑖 = 𝑟, 𝑛 = 𝑡
Compound semiannually: đť‘š = 2, so đť‘– =đť‘ź
2, 𝑛 = 2𝑡
Compound quarterly: đť‘š = 4, so đť‘– =đť‘ź
4, 𝑛 = 4𝑡
Compound monthly: đť‘š = 12, so đť‘– =đť‘ź
12, 𝑛 = 12𝑡
Compound daily: đť‘š = 365, so đť‘– =đť‘ź
365, 𝑛 = 2𝑡
![Page 4: Section 5.1 Simple and Compound Interest 2017(5003) mathematics...Section 5.1 Simple and Compound Interest Page | 4 Example 4. Suppose $1000 is deposited for 6 years in an account](https://reader034.vdocuments.net/reader034/viewer/2022042612/5f5246211fe5147e426a8bb5/html5/thumbnails/4.jpg)
Section 5.1 Simple and Compound Interest Page | 4
Example 4. Suppose $1000 is deposited for 6 years in an account paying 4.25% per year
compound annually.
(a) Find the compound amount.
(b) Find the amount of interest earned.
Example 5. Find the amount of interest earned by a deposit of $2450 for 6.5 years at 5.25%
compounded quarterly.
![Page 5: Section 5.1 Simple and Compound Interest 2017(5003) mathematics...Section 5.1 Simple and Compound Interest Page | 4 Example 4. Suppose $1000 is deposited for 6 years in an account](https://reader034.vdocuments.net/reader034/viewer/2022042612/5f5246211fe5147e426a8bb5/html5/thumbnails/5.jpg)
Section 5.1 Simple and Compound Interest Page | 5
![Page 6: Section 5.1 Simple and Compound Interest 2017(5003) mathematics...Section 5.1 Simple and Compound Interest Page | 4 Example 4. Suppose $1000 is deposited for 6 years in an account](https://reader034.vdocuments.net/reader034/viewer/2022042612/5f5246211fe5147e426a8bb5/html5/thumbnails/6.jpg)
Section 5.1 Simple and Compound Interest Page | 6
Example 6. Suppose Susan Nassy invested $5000 in a savings account that paid quarterly
interest. After 6 years the money had accumulated to $6539.96. What was the annual interest
rate?
![Page 7: Section 5.1 Simple and Compound Interest 2017(5003) mathematics...Section 5.1 Simple and Compound Interest Page | 4 Example 4. Suppose $1000 is deposited for 6 years in an account](https://reader034.vdocuments.net/reader034/viewer/2022042612/5f5246211fe5147e426a8bb5/html5/thumbnails/7.jpg)
Section 5.1 Simple and Compound Interest Page | 7
Example 7. Joe Vetere needs to borrow money. His neighborhood bank charges 8% interest
compounded semiannually. An Internet bank charges 7.9% interest compounded monthly. At
which bank will joe pay the lesser amount of interest?
![Page 8: Section 5.1 Simple and Compound Interest 2017(5003) mathematics...Section 5.1 Simple and Compound Interest Page | 4 Example 4. Suppose $1000 is deposited for 6 years in an account](https://reader034.vdocuments.net/reader034/viewer/2022042612/5f5246211fe5147e426a8bb5/html5/thumbnails/8.jpg)
Section 5.1 Simple and Compound Interest Page | 8
Example 8. Stacey Sveum must pay a jump sum of $6000 in 5 years. What amount deposited
today at 6.2% compounded annually will amount to $6000 in 5years?
Example 9. Find the present value of $16,000 in 9 years if money can be deposited at 2%
compounded semiannually.
![Page 9: Section 5.1 Simple and Compound Interest 2017(5003) mathematics...Section 5.1 Simple and Compound Interest Page | 4 Example 4. Suppose $1000 is deposited for 6 years in an account](https://reader034.vdocuments.net/reader034/viewer/2022042612/5f5246211fe5147e426a8bb5/html5/thumbnails/9.jpg)
Section 5.1 Simple and Compound Interest Page | 9
Example 10. Suppose the $2450 is deposited at 5.25% compounded quarterly until it reaches
at least $10,000. How much time is required?
Example 11. Suppose the general level of inflation in the economy average 8% per year. Find
the number of years it would take for the overall level of prices to double.
![Page 10: Section 5.1 Simple and Compound Interest 2017(5003) mathematics...Section 5.1 Simple and Compound Interest Page | 4 Example 4. Suppose $1000 is deposited for 6 years in an account](https://reader034.vdocuments.net/reader034/viewer/2022042612/5f5246211fe5147e426a8bb5/html5/thumbnails/10.jpg)
Section 5.1 Simple and Compound Interest Page | 10
Example 12. Suppose that $2450 is deposited at 5.25% compounded continuously.
(a) Find the compound amount and the interest earned after 6.5 years.
(b) Find the effective rate.
(c) Find the time required for the original $2450 to grow to $ 10,000.
![Page 11: Section 5.1 Simple and Compound Interest 2017(5003) mathematics...Section 5.1 Simple and Compound Interest Page | 4 Example 4. Suppose $1000 is deposited for 6 years in an account](https://reader034.vdocuments.net/reader034/viewer/2022042612/5f5246211fe5147e426a8bb5/html5/thumbnails/11.jpg)
Section 5.1 Simple and Compound Interest Page | 11