1. Find the simple interest on a $400 investment made for 5 years at an interest rate of 7%/year. What is the accumulated amount?
[removed]A) The simple interest is $140, the accumulated amount is $540.[removed]B) The simple interest is $115, the accumulated amount is $515.[removed]C) The simple interest is $120, the accumulated amount is $520.[removed]D) The simple interest is $125, the accumulated amount is $555.
2. If the accumulated amount is $3,720 at the end of 3 years and the simple rate of interest is 8%/year, what is the principal?
[removed]A) The principal is $3,500.[removed]B) The principal is $3,360.[removed]C) The principal is $3,000.[removed]D) The principal is $3,200.
3. Find the accumulated amount A if the principal P = $2,000 is invested at the interest rate of r = 6% per year for t = 6 years, compounded annually.
[removed]A) The accumulated amount is $3,508.28.[removed]B) The accumulated amount is $3,194.16.[removed]C) The accumulated amount is $2,837.04.[removed]D) The accumulated amount is $2,708.89.
4. Find the accumulated amount A if the principal P = $11,000 is invested at the interest rate of r = 5% per year for t = 5.5 years, compounded quarterly.
[removed]A) The accumulated amount is $14,585.32.[removed]B) The accumulated amount is $13,785.93.[removed]C) The accumulated amount is $14,100.05.[removed]D) The accumulated amount is $14,457.17.
5. Determine the simple interest rate at which $1,500 will grow to $1,550 in the 8 months. Round your answers to the nearest tenth of percent.
[removed]A) The interest rate is 5%/year.[removed]B) The interest rate is 4.33%/year.[removed]C) The interest rate is 4.76%/year.[removed]D) The interest rate is 66.67%/year.[removed]E) The interest rate is 3.06%/year.
6. Find the present value of $40,000 due in 4 years at the given rate of interest 8%/year compounded monthly.
[removed]A) The present value is $28,948.67.[removed]B) The present value is $29,433.94.[removed]C) The present value is $29,076.82.[removed]D) The present value is $29,748.06.
7. In order to help finance the purchase of a new house, the Abdullahs have decided to apply for a short-term loan (a bridge loan) in the amount of $140,000 for a term of 1 mo. If the bank charges simple interest at the rate of 12%/year, how much will the Abdullahs owe the bank at the end of the term?
[removed]A) $141,400[removed]B) $140,012
[removed]C) $146,800[removed]D) $144,900
8. The Kwans are planning to buy a house 6 years from now. Housing experts in their area have estimated that the cost of a home will increase at a rate of 6%/year during that period. If this economic prediction holds true, how much can the Kwans expect to pay for a house that currently costs $160,000?
[removed]A) $218,199[removed]B) $221,562[removed]C) $230,490[removed]D) $226,963
9. The manager of a money market fund has invested $4.2 million in certificates of deposit that pay interest at the rate of 5.4%/year compounded quarterly over a period of 5 years. How much will the investment be worth at the end of 5 years?
[removed]A) 5,491,921.88[removed]B) 3,211,990.34[removed]C) 1,291,921.88[removed]D) 12,024,347.20
10. Find the effective rate corresponding to nominal rate 6% / year compounded monthly. Round the answers to the nearest hundredth of percent.
[removed]A) 6.538%[removed]B) 5.858%[removed]C) 6.598%[removed]D) 6.168%
11. Find the interest rate needed for an investment of $4,000 to grow to an amount of $5,000 in 4 yr if interest is compounded continuously. Please round the answer to the nearest hundredth of percent.
[removed]A) 5.58 %/yr[removed]B) 5.70 %/yr[removed]C) 6.63 %/yr[removed]D) 5.01 %/yr[removed]E) 5.92 %/yr
12. Anthony invested a sum of money 6 yr ago in a savings account that has since paid interest at the rate of 7%/year compounded quarterly. His investment is now worth $19,713.77. How much did he originally invest? Please round the answer to the nearest cent.
[removed]A) $13,000.01[removed]B) $12,500.01[removed]C) $14,000.01[removed]D) $11,500.01[removed]E) $11,000.01
13. Georgia purchased a house in 1998 for $220,000. In 2003 she sold the house and made a net profit of $50,000. Find the effective annual rate of return on her investment over the 5-yr period. Please round the answer to the nearest tenth of percent.
[removed]A) 3.7%/yr[removed]B) 3.1%/yr[removed]C) 4.4%/yr[removed]D) 4.2%/yr[removed]E) 5.6%/yr
14. Find the amount of an ordinary annuity of 10 yearly payments of $1,800 that earn interest at 10% per year, compounded annually.
[removed]A) $4,668.74[removed]B) $28,687.36[removed]C) $87,798.04[removed]D) $3,600.00
15. Robin, who is self-employed, contributes $4,000/year into a Keogh account. How much will he have in the account after 15 years if the account earns interest at the rate of 6.5%/year compounded yearly?
[removed]A) $96,728.68[removed]B) $10,287.36[removed]C) $158,267.14[removed]D) $3,771.28
16. If a merchant deposits $1,500 annually at the end of each tax year in an IRA account paying interest at the rate of 10%/year compounded annually, how much will she have in her account at the end of 25 years? Round your answer to two decimal places.
[removed]A) $16,252.06[removed]B) $147,520.59[removed]C) $5,250.00[removed]D) $34,663.65
17. Find the present value of an ordinary annuity of $600 payments each made quarterly over 5 years and earning interest at 4% per year compounded quarterly.
[removed]A) $8,154.20[removed]B) $2,671.09[removed]C) $10,827.33[removed]D) $56,916.87
18. Juan invested $24,000 in a mutual fund 5 years ago. Today his investment is worth $34,616. Find the effective annual rate of return on his investment over the 5-year period.
[removed]A) 10.3%/year[removed]B) 8%/year[removed]C) 83%/year[removed]D) 8.3%/year
19. Find the amount of an ordinary annuity for 5 years of quarterly payments of $2,200 that earn interest at 4% per year compounded quarterly.
[removed]A) $11,222.21[removed]B) $65,511.77[removed]C) $48,441.81[removed]D) $2,684.42
20.Find the present value of the ordinary annuity. Please round the answer to the nearest cent.$2,000 per semiannual period for 7 yr at 12%/year compounded semiannually
[removed]A) P = $18,589.97[removed]B) P = $17,913.54[removed]C) P = $20,003.52[removed]D) P = $13,147.80[removed]E) P = $9,629.07
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