Exam 2 Financial Formulas

Use theses flashcards to help you study for Exam 2 on Financial Mathematics

Compound Interest

Annuity

Effective Annual Interest

Simple Interest

Continuously Compounded Interest

Loan Payment Formula

Which formula would you use for this question? A bank offers an investment account with an annual interest rate of 1.22% compounded monthly. Kira invests $3900 into the account for 2 years. Assuming no withdrawals are made, how much money is in Kira's account after 2 years?

Compound Interest

Which formula would you use for this question? The Peterson family wants to save money to travel the world. They purchase an annuity with a monthly payment of $39 that earns 4.6% interest, compounded monthly. Payments will be made at the end of each month. Find the total value of the annuity in 13 years.

Annuity

Which formula would you use for this question? How much should be invested now at an interest rate of 6.5% per year, compounded continuously, to have $2500 in four years?

Continuously Compounded Interest

Which formula would you use for this question? Carlos borrowed money from an online lending company to invest in the stock market.He took out a personal, amortized loan for $28,000, at an interest rate of 7.95%, with monthly payments for a term of 3 years. Find Carlos' monthly payment.

Loan Monthly Payments

Which formula would you use for this question? Nicole deposits $90,000 into an account that pays simple interest at a rate of 6% per year. Find the interest Nicole earns during the first year.

Simple Interest