Find the simple interest on a $400 investment made for 5
years at an interest rate of 7%/year. What is the accumulated amount?
A) The simple interest is
$140, the accumulated amount is $540.
B) The simple interest is $115, the accumulated amount is
$515.
C) The simple interest is $120, the accumulated amount is
$520.
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?
A) The principal is $3,500.
B) The principal is $3,360.
C) The principal is $3,000.
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.
A) The accumulated amount is $3,508.28.
B) The accumulated amount is $3,194.16.
C) The accumulated amount is
$2,837.04.
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.
A) The accumulated amount is $14,585.32.
B) The accumulated amount is $13,785.93.
C) The accumulated amount is $14,100.05.
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.
A) The interest rate is 5%/year.
B) The interest rate is 4.33%/year.
C) The interest rate is 4.76%/year.
D) The interest rate is 66.67%/year.
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.
A) The present value is $28,948.67.
B) The present value is $29,433.94.
C) The present value is $29,076.82.
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?
A) $141,400
B) $140,012
C) $146,800
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?
A) $218,199
B) $221,562
C) $230,490
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?
A) 5,491,921.88
B) 3,211,990.34
C) 1,291,921.88
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.
A) 6.538%
B) 5.858%
C) 6.598%
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.
A) 5.58 %/yr
B) 5.70 %/yr
C) 6.63 %/yr
D) 5.01 %/yr
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.
A) $13,000.01
B) $12,500.01
C) $14,000.01
D) $11,500.01
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.
A) 3.7%/yr
B) 3.1%/yr
C) 4.4%/yr
D) 4.2%/yr
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.
A) $4,668.74
B) $28,687.36
C) $87,798.04
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?
A) $96,728.68
B) $10,287.36
C) $158,267.14
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.
A) $16,252.06
B) $147,520.59
C) $5,250.00
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.
A) $8,154.20
B) $2,671.09
C) $10,827.33
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.
A) 10.3%/year
B) 8%/year
C) 83%/year
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.
A) $11,222.21
B) $65,511.77
C) $48,441.81
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
A) P = $18,589.97
B) P = $17,913.54
C) P = $20,003.52
D) P = $13,147.80
E) P = $9,629.07