HW Compound Interest

Last updated over 2 years ago

16 questions

Use the information below for #1-5.

You want to go on a roadtrip with your friends and decide you want to buy the 2021 Jeep Wrangler Rubicon which starts at $38,975. Let's see how much this will cost you.

When buying a car, there are other fees you have to pay as well.
-ADD $400 to the price of the Jeep to pay for vehicle registration
-ADD $55 for documentation fee
-ADD a $995 destination charge

Then there's sales tax which is approximately 7.75%.
-Now MULTIPLY by 1.0775 to calculate what the price of the Jeep will be after sales tax.

Use a $ and round to the nearest hundredth.

To buy this Jeep, you will need to take out a loan, or finance the car.  The interest rate that you are given is determined mostly by your credit score.  

Here are 3 different loan options depending on your credit score.  These loans are for 5 years, and the interest is compounded annually.

How much would you end up paying for the Jeep if you got the APR interest rate for a poor credit score? Remember, it is being compounded annually.
*Use your answer to #1 as your principal or starting amount.

Use $ and round to the nearest hundredth.

How much would you end up paying for the Jeep if you got the APR interest rate for the great credit score? Remember, it is being compounded annually.

Use $ and round to the nearest hundredth.

How much more would you pay for the Jeep if you have poor credit than if you have great credit?

Use $ and round to the nearest hundredth.

Let's assume you have great credit! Let's calculate your monthly payment.
Take the total cost of the Jeep (with great credit from #3), and divide by 60 months (because it's a 5 year loan).

What is your monthly payment?
Use $ and round to the nearest hundredth.

Keep in mind, if you save up to put money down upfront (a down payment) your loan will be less money and your monthly payment will be more affordable. :) 

Use $ and round to the nearest hundredth.

You get a credit card so that you can start building credit, and you buy a new iphone for $1200. Then, you stop making payments on your credit card. If your credit card charges 23.99% interest, compounded DAILY, how much will you owe in 3 years?

Use $ and round to the nearest whole dollar.

Use $ and round to the nearest hundredth.

Read the question carefully!
It's asking for the interest, so that's the amount gained after your principal investment.

Use $ and round to the nearest hundredth.

Find the principal amount invested if the accumulated amount is $8,499.81 after 3 years compounded monthly at a rate of 2%.

Use $ and round to the nearest hundredth.

You are saving up to buy a stand-up paddle board (SUP) that costs $1,099.50. Your goal is to be able to afford it in 2 years. How much money should you invest in an account that pays 2.65% annual interest compounded semi-annually?

Use $ and round to the nearest hundredth.

Your grandma gives you $5,500 to deposit into a bank account.  Which of the options below would be the best for you to have the greatest amount after 7 years?

--> Account (A) pays 3.5% interest compounded monthly: _______ 

OR

--> Account (B) pays 3.5% interest compounded continuously: _______ 
(use the formula from last class A=Pe^rt)

Which account would you invest your money in? _______ 

You are saving up to buy a tennis racket to play club tennis in college. The racket costs $450.00 Your goal is to be able to afford it in 3 years. How much money should you invest in an account that pays 4.82% annual interest compounded continuously for 3 years?

Use $ and round to the nearest hundredth.

You take out a loan for $3000 to buy a new pair of water skis. Your loan has a 4% interest rate compounded annually. It takes you 3 years to pay it back. How much interest did you pay?

Use $ and round to the nearest hundredth.

HW Compound Interest

You want to go on a roadtrip with your friends and decide you want to buy the 2021 Jeep Wrangler Rubicon which starts at $38,975. Let's see how much this will cost you.

To buy this Jeep, you will need to take out a loan, or finance the car. The interest rate that you are given is determined mostly by your credit score.

Here are 3 different loan options depending on your credit score. These loans are for 5 years, and the interest is compounded annually.

How much would you end up paying for the Jeep if you got the APR interest rate for a poor credit score? Remember, it is being compounded annually. *Use your answer to #1 as your principal or starting amount.Use $ and round to the nearest hundredth.

How much would you end up paying for the Jeep if you got the APR interest rate for the great credit score? Remember, it is being compounded annually.Use $ and round to the nearest hundredth.

How much more would you pay for the Jeep if you have poor credit than if you have great credit?Use $ and round to the nearest hundredth.

Let's assume you have great credit! Let's calculate your monthly payment.Take the total cost of the Jeep (with great credit from #3), and divide by 60 months (because it's a 5 year loan). What is your monthly payment?Use $ and round to the nearest hundredth.

Keep in mind, if you save up to put money down upfront (a down payment) your loan will be less money and your monthly payment will be more affordable. :)

Use $ and round to the nearest hundredth.

Use $ and round to the nearest hundredth.

You get a credit card so that you can start building credit, and you buy a new iphone for $1200. Then, you stop making payments on your credit card. If your credit card charges 23.99% interest, compounded DAILY, how much will you owe in 3 years? Use $ and round to the nearest whole dollar.

Use $ and round to the nearest hundredth.

Read the question carefully!It's asking for the interest, so that's the amount gained after your principal investment.Use $ and round to the nearest hundredth.

Find the principal amount invested if the accumulated amount is $8,499.81 after 3 years compounded monthly at a rate of 2%.Use $ and round to the nearest hundredth.

You are saving up to buy a stand-up paddle board (SUP) that costs $1,099.50. Your goal is to be able to afford it in 2 years. How much money should you invest in an account that pays 2.65% annual interest compounded semi-annually?Use $ and round to the nearest hundredth.

You take out a loan for $3000 to buy a new pair of water skis. Your loan has a 4% interest rate compounded annually. It takes you 3 years to pay it back. How much interest did you pay?Use $ and round to the nearest hundredth.

How much would you end up paying for the Jeep if you got the APR interest rate for a poor credit score? Remember, it is being compounded annually.
*Use your answer to #1 as your principal or starting amount.

Use $ and round to the nearest hundredth.

How much would you end up paying for the Jeep if you got the APR interest rate for the great credit score? Remember, it is being compounded annually.

Use $ and round to the nearest hundredth.

How much more would you pay for the Jeep if you have poor credit than if you have great credit?

Use $ and round to the nearest hundredth.

Let's assume you have great credit! Let's calculate your monthly payment.
Take the total cost of the Jeep (with great credit from #3), and divide by 60 months (because it's a 5 year loan).

What is your monthly payment?
Use $ and round to the nearest hundredth.

You get a credit card so that you can start building credit, and you buy a new iphone for $1200. Then, you stop making payments on your credit card. If your credit card charges 23.99% interest, compounded DAILY, how much will you owe in 3 years?

Use $ and round to the nearest whole dollar.

Read the question carefully!
It's asking for the interest, so that's the amount gained after your principal investment.

Use $ and round to the nearest hundredth.

Find the principal amount invested if the accumulated amount is $8,499.81 after 3 years compounded monthly at a rate of 2%.

Use $ and round to the nearest hundredth.

You are saving up to buy a stand-up paddle board (SUP) that costs $1,099.50. Your goal is to be able to afford it in 2 years. How much money should you invest in an account that pays 2.65% annual interest compounded semi-annually?

Use $ and round to the nearest hundredth.

You take out a loan for $3000 to buy a new pair of water skis. Your loan has a 4% interest rate compounded annually. It takes you 3 years to pay it back. How much interest did you pay?

Use $ and round to the nearest hundredth.