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# Interest rate

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What is the ending balance from an initial deposit of \$4,250 at 12% compounded quarterly for 6 years?

Find the present value of \$5,000 in 5 years at 10% compounded annually.

Find the value of an annuity in which \$1,100 is deposited at the end of each year for 5 years, at an interest rate of 11.5% compounded annually.

Determine the amount of each payment to be made to a sinking fund in order to pay off a \$120,000 loan in 8 1/2 years when the funds earn interest at a rate of 10% compounded semiannually.

#### Solution Preview

What is the ending balance from an initial deposit of \$4,250 at 12% compounded quarterly for 6 years?

In this question, we are to find the future value of money. Because the compounding is done quarterly, the periodic interest rate is 12%/4 = 3% and there are 6 years * 4 periods per year = 24 periods. As a result, the ending balance will be
\$4,250 * (1 + 3%)^24 = \$8,639.37

Find the present value of \$5,000 in ...

#### Solution Summary

This provides examples of working with interest, including ending balance, present value, future value of an annuity, and payments to a sinking fund.

\$2.19