You win the Zillion Dollar Lottery. Starting in 1 Year, you will receive$500,000 annually for 20 years. The states lottery commission has just enough in an account of 15% compounded annually to pay this annuity. How much money is in it today?]
A treasury bill has a maturity value of $10,000 5 years from now. If I receive 5% interest on it, what do I pay for it now?
I wish to by a CD stereo system. I want to collect $800 in 1 year. How much do I deposit monthly in an account that pays 5%compounded monthly?
I take a car loan of $15000. I make monthly payments for 5 years at 6% compounded monthly. What is my monthly payment/
I put $1000 in a account that compound quarterly at 8%. How much do I have after 2 year?
Compare the yields (effective raters) of 10%compounded daily and 10.2% compounded semiannually. Which would you chooses and why?
This provides several situations involving interest and compound interest: treasury bills, savings, payments, and yields. It discusses the difference between different compounding terms. This solution is provided in an attached Word document.