COMPOUND INTEREST PROBLEMS

1- How much would you have to invest at 6% on January 1/2013 in order to accumulate $1,791 on
January 1/2019?
2- What is the present worth on January 1/2013 of $1,263 on January 1/2020 if the interest is at 6%?
3- If $840.00 is invested at 6% on January 1/2013, what equal year-end withdrawal can be made each
year for 10 years leaving nothing in the fund after the 10th withdrawal?
4- How much will be accumulated in a fund earning 6% interest at the end of 10 years if $114.10 is
deposited at the end of each year for 10 years, beginning in 2013?
5- If $2,000 is invested now, $1,500 two years from now, and $1,000 four years from now – all at 6%
- what will the total amount be ten years from now?
6- How much invested now at 6% would be just sufficient to provide $1,200 five years hence, $1,200
ten years hence, $1,200 fifteen years hence, and $1,200 twenty years hence? (hence = from now)
7- What annual year-end payment for 10 years is necessary to repay a present loan of $10,000 if
interest is at 6%?
8- What is the present worth of $3,000 now, $4,000 five years hence, and $200 a year for 10 years if
interest is at 8%?
9- How much money must be invested to accumulate $850 in nine years if interest is at 8%?
10- How many years will it take to $5,000 to reach a sum of $7,000 at an interest rate of 6%
compounded annually?
11- How much money must be invested to accumulate $850 in nine years at 12% compounded
semiannually? Note: ieff vs. inominal → ieff =[1+ inominal /m]m – 1
12- What effective interest rate corresponds to a nominal interest rate of 6% compounded quarterly
(i.e., every 3 months = 4 times within a year)?
13- A man is to receive an annuity of $1,000 a year for 15 years, the first payment being made on
March 1st , 2013. He offers to sell the annuity on March 1st , 2010 with interest at 6% compounded
annually. What is a fair price to pay?
14- On the day a baby was born, his father decided to establish a fund for his college education by
depositing a certain amount on each of his birthdays from the first through the 16th so that he can
withdraw $2,000 on his 18th, 19th, 20th and 21st birthday. If the fund earns 6% per year, how much
must the annual deposit be?
15- What annual year-end payment for ten years is necessary to repay a present loan of $10,000 if
interest is at 6%?
16- In the loan previously described, how much would be owed after the 4th payment had been made?
17- In that same loan, how much will be saved in interests if the loan is cancelled immediately after the
6th payment is made?
18- You buy a Volky for $3,000, giving $1,000 as down payment. The rest is to be paid in 24 equal
monthly payments. How much should you pay each month if the interest charged to you is 12%?
What is the “real” interest you are paying?

1
 6% compound interest rate factors

Single Payment Uniform Series

Compound Present Sinking Capital Compound Present
Amount Worth Fund Recovery Amount Worth
Factor Factor Factor Factor Factor Factor

Given P Given F Given F Given P Given A Given A

To find F To find P To find A To find A To find F To find P
n n n n n n n n
(1+i) 1/ (1+i) i/[(1+i) – 1] i(1+i) /[(1+i) – 1] [(1+i) – 1]/ i [(1+i) – 1]/ [i(1+i) ]

n [F/P,i,n] [P/F,i,n] [A/F,i,n] [A/P,i,n] [F/A,i,n] [P/A,i,n] n

1 1.060000 0.943396 1.000000 1.060000 1.000000 0.943396 1
2 1.123600 0.889996 0.485437 0.545437 2.060000 1.833393 2
3 1.191016 0.839619 0.314110 0.374110 3.183600 2.673012 3
4 1.262477 0.792094 0.228591 0.288591 4.374616 3.465106 4
5 1.338226 0.747258 0.177396 0.237396 5.637093 4.212364 5
6 1.418519 0.704961 0.143363 0.203363 6.975319 4.917324 6
7 1.503630 0.665057 0.119135 0.179135 8.393838 5.582381 7
8 1.593848 0.627412 0.101036 0.161036 9.897468 6.209794 8
9 1.689479 0.591898 0.087022 0.147022 11.491316 6.801692 9
10 1.790848 0.558395 0.075868 0.135868 13.180795 7.360087 10
11 1.898299 0.526788 0.066793 0.126793 14.971643 7.886875 11
12 2.012196 0.496969 0.059277 0.119277 16.869941 8.383844 12
13 2.132928 0.468839 0.052960 0.112960 18.882138 8.852683 13
14 2.260904 0.442301 0.047585 0.107585 21.015066 9.294984 14
15 2.396558 0.417265 0.042963 0.102963 23.275970 9.712249 15
16 2.540352 0.393646 0.038952 0.098952 25.672528 10.105895 16
17 2.692773 0.371364 0.035445 0.095445 28.212880 10.477260 17
18 2.854339 0.350344 0.032357 0.092357 30.905653 10.827603 18
19 3.025600 0.330513 0.029621 0.089621 33.759992 11.158116 19
20 3.207135 0.311805 0.027185 0.087185 36.785591 11.469921 20
21 3.399564 0.294155 0.025005 0.085005 39.992727 11.764077 21
22 3.603537 0.277505 0.023046 0.083046 43.392290 12.041582 22
23 3.819750 0.261797 0.021278 0.081278 46.995828 12.303379 23
24 4.048935 0.246979 0.019679 0.079679 50.815577 12.550358 24
25 4.291871 0.232999 0.018227 0.078227 54.864512 12.783356 25
26 4.549383 0.219810 0.016904 0.076904 59.156383 13.003166 26
27 4.822346 0.207368 0.015697 0.075697 63.705766 13.210534 27
28 5.111687 0.195630 0.014593 0.074593 68.528112 13.406164 28
29 5.418388 0.184557 0.013580 0.073580 73.639798 13.590721 29
30 5.743491 0.174110 0.012649 0.072649 79.058186 13.764831 30
31 6.088101 0.164255 0.011792 0.071792 84.801677 13.929086 31
32 6.453387 0.154957 0.011002 0.071002 90.889778 14.084043 32
33 6.840590 0.146186 0.010273 0.070273 97.343165 14.230230 33
34 7.251025 0.137912 0.009598 0.069598 104.18375 14.368141 34
35 7.686087 0.130105 0.008974 0.068974 111.43478 14.498246 35