1) Suppose you put $1,000 in a savings account that earns 3% interest per year

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1) Suppose you put $1,000 in a savings account that earns 3% interest per year. How much interest will you earn in one year?

2.     you put the same $1,000 in a savings account earning 5% interest per year. How much interest would you earn in three years?

3.     If you invest $500 in a simple interest account earning 6% simple interest per month, what will be the total value of the account after 10 months?

4.     If you put $800 in a simple interest account earning 5.2% interest per month, how much interest will you have earned after two years?

 

5.     How much would you have to invest in an account earning 5% simple interest every year to earn $50 after two years?

6.     What annual interest rate would you have to get to earn $85 interest on a $450 investment after five years?

Analysis Questions

7.     Redo Example 2 but assume that the interest is paid every month instead of every year. Discuss the difference between monthly versus annual interest.

8.     Suppose you invest $1,200 in an account that earns 4% simple interest every year. What interest rate would you have to get to make the same amount of interest if the simple interest were calculated every month instead of every year?

9.     If you invest $1,500 in an account that earns 5% simple interest per year, how long would you have to leave the money in your account to double your investment? (Remember that the I in the formula is just the interest earned.)

10.  If you invest $5,000 in a simple interest account at 4.6% for two years, what interest rate would you have to get to earn the same amount of interest in one year?

11.  If you have $500 to invest and assuming that you're paid simple interest, would you be better off putting it in an account that earns 5% per year for one year or an account that earns 1% per month for six months?