Consider an account with an APR of 5.6%. Find the APY with
quarterly compounding, monthly compounding, and daily
compounding. Comment on how changing the compounding period affects
the annual yield.
Suppose someone wants to accumulate $130,000 for retirement in
30 years. The person has two choices. Plan A is a single deposit
into an account with annual compounding and an APR of 8%. Plan B
is a single deposit into an account with continuous compounding and
an APR of 7.8%. How much does the person need to deposit in each
account in order to reach the goal?
Find the savings plan balance after 2 years with an APR of 3%
and monthly payments of $200.
Suppose that on January 1 you have a balance of $4200 on a
credit card whose APR is 16%, which you want to pay off in 1 year.
Assume that you make no additional charges to the card after
January 1.
a. Calculate your monthly payments.
b. When the card is paid off, how much will you have paid since
January 1?
c. What percentage of your total payment from part (b) is
interest?
Assume you have a balance of $1000 on a credit card with an APR
of 18%, or 1.5% per month. You start making monthly payments of
$200, but at the same time you charge an additional $100 per month
to the credit card. Assume that interest for a given month is based
on the balance for the previous month. The following table shows
how you can calculate your monthly balance. Complete and extend the
table to show the balance at the end of each month until the debt
is paid off. How long does it take to pay off the credit card
debt?