SIMPLE INTEREST

1. A savings account is set up so that the simple interest earned on the investment is moved into a
separate account at the end of each year. If an investment of $5,000 is invested at 4.5%, what is
the total simple interest accumulated in the checking account after 2 years.
2. A savings account is set up so that the simple interest earned on the investment is moved into a
separate account at the end of each year. If an investment of $7,000 is invested at 7.5%, what is
the total simple interest accumulated in the checking account after 3 years.
3. When invested at an annual interest rate of 6% an account earned $180.00 of simple interest in
one year. How much money was originally invested in account?
4. When invested at an annual interest rate of 7% an account earned $581.00 of simple interest in
one year. How much money was originally invested in account?
5. A savings account is set up so that the simple interest earned on the investment is moved into a
separate account at the end of each year. If an investment of $7,000 accumulate $910 of
interest in the account after 2 years, what was the annual simple interest rate on the savings
account?
6. A savings account is set up so that the simple interest earned on the investment is moved into a
separate account at the end of each year. If an investment of $2,000 accumulate $360 of
interest in the account after 4 years, what was the annual simple interest rate on the savings
account?
7. Sylvia bought a 6-month $1900 certificate of deposit. At the end of 6 months, she received a
$209 simple interest. What rate of interest did the certificate pay?
8. An investment earns 4.5% simple interest in one year. If the money is withdrawn before the
year is up, the interest is prorated so that a proportional amount of the interest is paid out. If
$2400 is invested, what is the total amount that can be withdrawn when the account is closed
out after 2 months?
9. Allison charged a $30 handbag on her credit card with an interest rate of 8%. How much money
would she pay after 6 months?
10. Marcus has $1,800 dollars from his summer job to invest. If he invest in a savings for 3 years at
a rate of 5.25%. How much interest will he earn?

COMPOUND INTEREST
1. If you deposit $4000 into an account paying 6% annual interest compounded quarterly, how 
much money will be in the account after 5 years? 
2. If you deposit $6500 into an account paying 8% annual interest compounded monthly, how 
much money will be in the account after 7 years? 
3.  How much money would you need to deposit today at 9% annual interest
compounded monthly  to have $12000 in the account after 6 years? 
4.  If you deposit $5000 into an account paying 6% annual interest compounded monthly, how 
long until there is $8000 in the account? 
 5.  If you deposit $8000 into an account paying 7% annual interest compounded quarterly, how 
long until there is $12400 in the account? 
6. At 3% annual interest compounded monthly, how long will it take to double your money? 
7.  If you deposit $4500 at 5% annual interest compounded quarterly, how much money will be in 
the account after 10 years?
8.  If you deposit $4000 into an account paying 9% annual interest compounded monthly, how 
long until there is $10000 in the account?
9.  If you deposit $2500 into an account paying 11% annual interest compounded quarterly, how 
long until there is $4500 in the account?
10.  How much money would you need to deposit today at 5% annual interest
compounded monthly  to have $20000 in the account after 9 years?

ORDINARY ANNUITY
1. A certain amount was invested on Jan 1, 2010 such that it generated a periodic payment of $1,000 at
the end of each month of the calendar year 2010. The interest rate on the investment was 13.2% annual
interest compounded quarterly. Calculate the original investment and the interest earned.

2. Alan decides to set aside $50 at the end of each month for his child’s college education. If the child
were to be born today, how much will be available for its college education when s/he turns 19 years
old? Assume an interest rate of 5% compounded weekly

3. On January 1, 2010, you put $1000 in a savings account that pays 6.14 % interest nominal interest
compounded monthly, and you will do this every year for the next 18 years then withdraw the balance
on December 31, 2028, to pay for your child’s college education. How much will you withdraw?

4. The terms of a single parent's will indicate that a child will receive an ordinary annuity of $16000.00
per year from age 18 to age 24(so the child can attend college) and that the balance of the estate goes
to a niece. If the parent dies on the child's 14th birthday, how much money must be removed from the
estate to purchase the annuity? ( Assume an interest rate of 6% compounded annually)