Kaplan MM225 unit 6 assignment

Unit 6: Instructor
Graded Assignment

Compound Interest

In
this and future Instructor Graded Assignments you will be asked to use the
answers you found in the Unit 1 Assignment.

Note:
For these questions you need to cite a reliable source for information, which
means you cannot use sites like Wikipedia, Ask.com®, and Yahoo® answers. If you
do use those sites the instructor may award 0 points for your response.

The
Assignment problems must have the work shown at all times. The steps for solving
the problems must be explained. Failure to do so could result in your
submission being given a 0. If you have any
questions about how much work to show, please contact your instructor.

Assignments
must be submitted as a Microsoft Word® document and uploaded to the Dropbox for
Unit 6. Please type all answers directly in this Assignment below the question
it applies to.

All Assignments are due by Tuesday at 11:59 PM ET of the assigned Unit.

Note:
All interest rates are to be assumed to be yearly
interest rates.

Question 1
(10
points)
1.
You decide to invest $15000 into a bank account that that is compounding its
interest monthly. Assuming the bank is paying out an interest rate of the
current prime rate – 1% (In the event that prime – 1% is less than 1%, use 1%),
and the investment is for 5 years

a) How much money
(total) do you have after the 5 years pass?

b) How much do you
earn in interest over the 5 years?

Question 2
(10
points)
2.
You wish to have $500,000 saved up in 30 years. Assuming that you can get an
interest rate of prime + 5% on your investment (compounded quarterly.)

a)
How much do you need to invest today to have $500,000 30 years in the
future?

b) How much of that total is
interest?

Question 3
(10
points)
3.
You borrow $50,000 at 5% interest (compounded daily).

a) After 1 year passes, you pay off
$25000 of the loan. How much do you
still owe on the loan?

b) After another year passes, you
wish to pay off the loan. How much do you need to pay to pay it off?

Essay
(15
points)

4.
While everyone dreams of high interest rates for investments, usually high
interest rates come with other disadvantages. Using the interest or other
sources, research and write an essay on the advantages and disadvantages of
higher interest rates on investments. Look at factors like risk, reward, and
possible other things that would change to balance out the higher interest
rates.

Requirements
for essay
·
Write your essay in this document – do not
save it in a separate file.
·
You must clearly state your position with
well-structured paragraphs using proper grammar, spelling, and sentence
structure.
·
This is not an “opinion” question – you must
offer evidence to support your position, using properly-cited sources.
·
Your answer must be between ¾-1 page in
length.
·
You must cite and reference at least one
source (book, website, periodical) using APA format. The required website
counts as one source.

You
may submit your Assignments to the Math Center for review. Tutors will not grade
or correct the Assignment, but they will provide guidance for
improvement. Tutors will not, however, help you find web sites for the
Assignment.

Be
sure to submit Assignments early enough to receive feedback and make
corrections before the Assignment due date (24 hour turn-around times
Monday-Thursday and 48 hour turn-around times on weekends are typical).