week 5 quiz
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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? 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
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