612 CHAPTER 10 Consumer Mathematics Exercises $ All Exercises in this Section are related to financial literacy. Warm Up Exercises In Exercises 1– 4, fill in the blanks with an appropriate word, phrase, or symbol(s). 1. An investment is the use of money or capital for income or _______. Profit 2. Interest that is computed on the principal and any accumulated interest is _______ called interest. Compound 3. The effective annual yield or the annual percentage yield is the simple interest rate that gives the same amount of interest as a(n) _______ interest rate over the same period of time. Compound 4. The principal that you would have to invest now to have a certain amount of money in the future is called the _______ value. Present Practice the Skills In Exercises 5–12, a) use the compound interest formula to compute the total amount accumulated and b) determine the interest earned. Round all answers to the nearest cent. 5. $850 for 4 years at 2.4% compounded semiannually. a) $935.11 b) $85.11 6. $2500 for 3 years at 4% compounded semiannually. a) $2815.41 b) $315.41 7. $3000 for 6 years at 3% compounded quarterly. a) $3589.24 b) $589.24 8. $6500 for 5 years at 2.9% compounded quarterly. a) $7510.33 b) $1010.33 9. $10,000 for 2 years at 4.5% compounded monthly a) $10,939.90 b) $939.90 10. $1500 for 4 years at 1.2% compounded monthly a) $1573.72 b) $73.72 11. $8000 for 2 years at 4% compounded daily a) $8666.26 b) $666.26 12. $5600 for 7 years at 2.7% compounded daily a) $6764.98 b) $1164.98 In Exercises 13–16, determine the effective annual yield or the annual percentage yield for an account with the given compound interest rate. Round all answers to the nearest hundredth of a percent. 13. 3.6% compounded semiannually 3.63% 14. 4.2% compounded quarterly 4.27% 15. 4.8% compounded monthly 4.91% 16. 5.4% compounded daily 5.55% In Exercises 17–20, use the present value formula to determine the amount to be invested now, or the present value needed. Round your answers up to the nearest cent to ensure the investment is enough to reach the desired accumulated amount. 17. The desired accumulated amount is $100,000 after 4 years invested in an account with 4% interest compounded quarterly. $85,282.13 18. The desired accumulated amount is $15,000 after 30 years invested in an account with 3% interest compounded monthly. $6105.40 19. The desired accumulated amount is $25,000 after 10 years invested in an account with 3.6% interest compounded monthly. $17,451.32 20. The desired accumulated amount is $90,000 after 8 years invested in an account with 4% interest compounded semiannually. $65,560.13 Problem Solving In Exercises 21–36, if necessary, round all dollar figures to the nearest cent and round percents to the nearest hundredth of a percent. 21. Contest Winnings Joel invests the $1000 prize from a poetry contest into a savings account that pays 3.5% interest compounded quarterly. Determine the amount of money Joel has in the account at the end of 3 years. $1110.20 22. Skimboard Sale Moses sells his skimboard for $540 and invests this money in a money market account that pays 4.1% interest compounded quarterly. Determine the amount of money that Moses has in the account at the end of 2 years. $585.90 23. New Costumes To help pay for new costumes for a play, the Manlius Theater invests $1500 in a 30-month CD paying 3.3% interest compounded monthly. Determine the amount the theater will receive when it cashes in the CD after 30 months. $1628.81 SECTION 10.3 Ground Picture/Shutterstock
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