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29. Simple Interest versus Compound Interest First Simple Bank pays 6.3 percent simple interest on its investment accounts. If First Complex Bank pays interest on its accounts compounded annually. what rate should the bank set if it wants to match First Simple Bank over an investment horizon of 10 years? 30. Calculating Annuities Due You want to buy a new sports car from Muscle Motors for $68.500. The contract is in the form of a 60-month annuity due at an APR of 4.5 percent. What will your monthly payment be? 31. Calculating Interest Expense You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of 9 percent per year, compounded monthly for the first six months, increasing thereafter to 18.5 percent compounded monthly. Assuming you transfer the $10.000 balance from your existing credit card and make no subsequent payments, how much interest will you owe at the end of the first year? 32. Calculating the Number of Periods You are saving to buy a $255,000 house. There are two competing banks in your area, both offering certificates of deposit yielding 4.8 percent. How long will it take your initial $95,000 investment to reach the desired level at First Bank, which pays simple interest? How long at Second Bank, which compounds interest monthly?


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