### Determining the annual rate

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1. Find the compound amount if \$6,400 is invested for 2 years at 12% compounded monthly. What difference would compounding daily make in this example?

2. Deposits of \$1,000, \$1,100 and \$680 were made into a savings account, the first two years ago, the second 18 months ago, the third 6 months ago. How much is in the account now if the interest on all deposits is 12% compounded semi-annually?

3. A deposit of \$2,000 earns interest at a rate of 14% compounded quarterly. After two and a half years the interest rate changes to 13.5% compounded monthly. How much is in the account after six years?

4. Which is a better rate of interest, 16% compounded quarterly or 16 1/4% compounded semi-annually?

5. Billy Burnett's grandfather willed Billy \$10,000 payable on his twenty-first birthday. What will be the value of the bequest when Billy reaches 17 years of age if money is worth 8% compounded semi-annually?

6. Suppose you had three different offers for your used car. One person will give you \$1,000 right now, another offers \$1,200 six months from now and the other offers \$1,600 two years from now. If interest is 16% compounded quarterly, which offer is worth the most.

7. At 16% compounded quarterly, how long would it take for money to triple?

8. At what annual nominal rate of interest will \$6,900 earn \$6,400 interest in five years?

9. You want to have \$1,000,000 in your bank account when you turn 65 years old. Today is your 20th birthday. As a birthday present you received \$27,000 and you want to invest this amount. At what annual interest rate must you achieve to realize this goal?

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