Question 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.

Question 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.

Question 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.

Question 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.

Question 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.

Question 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.

Question 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

Question 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

Question 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

Question 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%

Question 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

Question 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

Question 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

Question 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

Question 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

Question 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

Question 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

Question 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

Question 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

Question 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.