Name______Date______Period ______
Appreciation and Compound Interest
Use these formulas:
Show your work!
- You have $1000 to invest in an account with a rate of 8%, compounded continuously. How long will it take you to double your money?
- A comic book is worth $3.50 today, and its value will grow at the rate of 8% per year. Find the value of the comic book after 12 years.
- A house is worth $200,000 today and its value will appreciate at the rate of 4% per year. Find the value of the house after 15 years.
- Bob wants to buy a car. The one he wants costs $12,500. If he has $3000 and deposits it into an account that pays 7.5% compounded monthly, how long will it be before he can buy the car?
- How long will it take you to triple an amount of $500 if you invest it at a rate of 6% compounded annually?
- A population of 150 deer in a state park quadruples every 10 years. Find the population of deer in 55 years.
- How much would you need to deposit into an account that pays 6.5% interest compounded semiannually to have $10,000 after 7 years?
- Suppose a retired professor who lives next door offers to pay you to work for him for the next 30 days. He says he will pay you $500 per day, or if you would like he will pay you $0.01 for the first day and double your pay each day after that. How much money would you make on the 30th day with each option? Which option should you choose?
- Your sister needs to decide into which bank to deposit her $4000 savings. Bank One offered her 3.8% interest compounded daily but she had to keep her money in the bank for at least 5 years. Moody Bank offers 4.1% interest compounded semiannually with the same condition that she keep her money in the bank for at least 5 years. Which bank should she go with and why? Support your answer by showing your work/results.
ANS.
1) 8.836yrs 2) $8.81 3) $360,188.70 4) 19.088yrs 5) 18.854yrs
6) 307,200 deer 7) $6390.56 8) $15,000 vs $10,737,418.24 Double it!!
9) $4836.95 @ Bank One$4899.93 @ Moody Bank