# week 5 quiz

 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