Advanced Consumer Mathematics Questions and Answers
Savings
1. A savings account pays 6% interest, compounded daily. If $50,000 is deposited, how much will
the account balance be after 15 years?
Answer: Use the formula A = P(1 + r/n)^(nt). With P=$50,000, r=0.06, n=365, and t=15, the balance
is approximately $120,488.74.
2. You save $1,000 monthly into an account earning 7.5% annually, compounded monthly. How
much will you have in the account after 20 years?
Answer: Use the future value of an annuity formula. Total value = $599,944.38.
3. An account offers 4% annual interest compounded semi-annually. How long will it take for
$12,000 to grow to $20,000? (Round to the nearest year.)
Answer: Solve using the compound interest formula. t approximately 11.28 years.
4. Two accounts are opened: one earning 5% annually with $5,000 and the other earning 3.5% with
$10,000. After 8 years, which account has grown more, and by how much?
Answer: Account 1 grows to $7,385.74. Account 2 grows to $13,553.66. Difference = $6,167.92 in
favor of Account 2.
5. A person decides to deposit $500 every three months for 10 years into an account earning 6%
compounded quarterly. What is the total value at the end?
Answer: Total value = $28,321.12 using the future value of an annuity formula.
Investment
6. An investor places $100,000 in a fund that grows at 10% annually, compounded annually. They
withdraw $10,000 every year starting after the first year. How much is left after 10 years?
Answer: Remaining balance = $57,158.12 after accounting for withdrawals.
7. You invest $5,000 quarterly in a retirement account earning 8% compounded quarterly. How
much will you have after 25 years?
Answer: Total value = $797,594.87.
8. A stock portfolio starts with $20,000 and has the following returns over 5 years: +12%, -8%,
+15%, -5%, and +10%. What is the final value?
Answer: Final value = $24,020.40 after applying year-by-year compounding.
9. An investment of $50,000 grows to $110,000 in 7 years. What was the annual rate of return,
compounded annually?
Answer: Annual return = 12.72%.
10. A $25,000 investment in a bond yields $1,500 annually. If the bond is held for 10 years and
reinvested at 5%, how much will you have at the end?
Answer: Total value = $40,722.76.
Credit
11. A $30,000 car loan has an APR of 6% compounded monthly, with a 7-year term. Calculate the
monthly payment and total interest paid over the life of the loan.
Answer: Monthly payment = $439.36. Total interest = $4,865.02.
12. A credit card has an APR of 22%, compounded daily. If the balance is $5,000 and no payments
are made for 1 year, how much is owed at the end of the year?
Answer: Total balance = $6,116.46.
13. A personal loan of $15,000 has a term of 5 years and a rate of 8% compounded monthly. What
is the total cost of the loan?
Answer: Total cost = $18,249.28.
14. If you only pay the minimum 2% of a $10,000 credit card balance monthly, how long will it take
to pay off the balance, assuming 18% annual interest?
Answer: Approximate time = 28 years.
15. A loan of $50,000 is amortized over 20 years at 5.5% annual interest. Calculate the outstanding
balance after 8 years.
Answer: Outstanding balance = $37,456.89.
Debit
16. A checking account starts with $5,000. A person makes weekly deposits of $200 and
withdrawals of $150. What is the balance after 52 weeks?
Answer: Final balance = $14,400.
17. A debit card purchase of $250 is declined due to insufficient funds. If the overdraft fee is $35 and
the starting balance was $200, what is the new balance?
Answer: New balance = -$85.
18. A person spends 40% of their monthly income on bills, 25% on groceries, and saves 15%. If
their monthly income is $4,000, how much remains for other expenses?
Answer: Remaining = $800.
19. A bank charges an overdraft fee of $30 for every transaction exceeding the account balance. If
three such transactions occur in one day with a $200 balance, what is the final balance after fees?
Answer: Final balance = -$70.
20. A person earns $5,000 bi-weekly but also pays $1,200 monthly in bills. How much is available
annually for savings if 20% is allocated for savings?
Answer: Available for savings = $26,400 annually.
Mixed Problems
21. You take out a $200,000 mortgage at a 4% APR, compounded monthly, for 30 years. What is
the monthly payment? What is the total interest paid over the loan term?
Answer: Monthly payment = $954.83. Total interest = $143,739.68.
22. A savings account and a mutual fund are compared over 10 years. The savings account earns
3% annually, compounded annually, while the mutual fund averages a 7% annual return. Which
grows faster if you deposit $1,000 monthly into both?
Answer: Savings account = $138,915. Mutual fund = $170,984. Mutual fund grows faster by
$32,069.
23. A credit card with an 18% APR charges monthly interest. If the initial balance is $2,000 and no
payments are made for 24 months, what is the balance?
Answer: Final balance = $3,062.56.
24. An investment doubles every 9 years. What is the effective annual rate of return? How long will it
take for $10,000 to grow to $40,000?
Answer: Annual rate = 8.04%. Time = 18 years.
25. A person deposits $500 monthly into a retirement account for 25 years, earning 8%
compounded monthly. After retirement, they withdraw $4,000 monthly. How long will the money
last?
Answer: The money will last approximately 15.2 years.
