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Section 2.6 Chapter 2 Review

Exercises Review Exercises

Exercise Group.
1.

If you deposit $1,525 in an account at 5.6% APR for fourteen years, how much will you have in the account and how much interest did you earn after 14 years if:

  1. The interest is compounded using simple interest.

  2. The interest is compounded quarterly.

  3. The interest is compounded weekly.

  4. The interest is compounded continuously.

2.

Alicia takes out a $2,300 loan that charges 15% APR simple interest. How much will she pay if she has the loan for 3 years? How much interest did she pay?

3.

Devon invests $25,000 into an account for 15 years. He earns 6.5% interest compounded quarterly. What is the future value and how much interest did he earn?

4.

The current inflation rate is 2.92%. If this continues for the next 10 years find the cost of the following items in the year 2029. Note: Inflation is Continuous Compound Interest.

  1. Gas Average: $3.49

  2. Dozen Eggs: $1.99

  3. Bread: $3.29

  4. Basic Monthly Cell Phone bill: $79.99

  5. Average cost of downloading a song: $1.99

5.

You are purchasing new furniture that costs $3500. You are required to make a down payment of $350. The loan will be a simple interest at 13% APR and the length of the loan will be 28 months. What is your monthly payment and how much did you pay back?

6.

Tom has misplaced the sales contract for his car and cannot remember the amount he originally financed. He does know that the interest rate was 9.6% APR for 60 months and the simple interest loan required a total of 60 payments at $254.23. What is the amount of money that Tom borrowed?

Exercise Group.
7.

For each find the Future Value, the total amount deposited, and the interest earned.

  1. Regular Deposit $350, Compounded Monthly, 6.5% APR for 25 years

  2. Regular Deposit $500, Compounded Quarterly, 6.5% APR for 15 years

  3. Regular Deposit $75, Compounded Weekly, 4.5% APR for 30 years

Exercise Group.
8.

For each house find the monthly payment for a 30 year loan and 5% APR. Find the amount of interest you pay on each loan.

  • House 1: John’s Landing Townhouse: $299,900

  • House 2: Gresham 4 bedroom House: $389,900

Exercise Group.
9.

Find the net monthly cash flow (1 month = 4 weeks)

Income: Expense
Job Income: $475 per week Rent: $650 per month
Loan: $2500 per term. (10 weeks) Groceries: $55 per week
Tuition and fees: $3000 per term
Books: $255 per term
Miscellaneous: $75 per week
10.

Pat loves painting. With tax, the total spent is about $46 each month on supplies. Once a week (52 weeks per year) the art class cost Pat $15.75. How much is Pat spending on painting in a year?

Exercise Group.
11.

If you are in the 12% tax bracket and can take a $1,000 deduction, how much will your tax bill decrease by?

12.

If you are in the 12% tax bracket and can take a $1,000 credit, how much will your tax bill decrease by?

13.

Amir’s made $43,000 in wages and $1000 in tips. He contributed $3,000 into his IRA account.

  1. Find Amir’s Gross Income.

  2. Find Amir’s Adjusted Gross Income (AGI).

14.

Amir has $9,540 he could take in itemized deductions. The standard deduction for a single filer is $12,000.

  1. Find Amir’s taxable income.

  2. Use the 2018 tax table determine to determine how much Amir owes in taxes.

15.

Amir can take a $1200 education credit and has had $2700 withheld from his paychecks.

  1. Determine the amount Amir will owe or be refunded.