1. Six months ago, Alecia purchased a bond for $9,000. Initially, she calculated the bond would be equivalent to a eight-month simple interest loan with an interest rate of 5% per year. However, Alecia’s car unexpectedly broke down today. To pay for the car repair, she decided to sell the bond to a friend for $9,200.
(A) What is the maturity value of the bond? Round your answer to the nearest dollar.
(B) From the friend’s perspective, what is the equivalent simple interest rate per year? Round your answer to the nearest tenth of a percent.
(C) By selling the bond for $9,200, Alecia’s true interest rate was not necessary the same as she initially calculated. What was her true equivalent simple interest rate per year?
2.You have agreed to loan some money to a friend at a simple interest rate of 122% per year. Your friend hasn’t taken this class; all they know is that they can pay you back $500 in 6 weeks.
How much money do you give your friend today so that the repayment of $500 in 6 weeks is equivalent to a simple interest loan with a rate of 122% per year? Round your answer to the nearest dollar.
3. If $8,000.00 is invested at 16% annual simple interest, how long does it take to be worth $23,360.00.
It will take
years (round to the nearest whole).
4. A payday loan company charges a $40 fee for a $450 payday loan that will be repaid in 11 days.
Treating the fee as interest paid, what is the equivalent annual interest rate?
% interest
5. Find the present value of $33,500 in 9 months at 5.7% interest
$
Give your answer to the nearest cent
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