Questions

Question 1 (1 point)

Saved

What is the simple interest earned on a 1-year $

3

00 deposit that earns

5

% per year?

Question 1 options:

a)

$25

b)

$7

6

c)

$15

d)

$40

e)

$

9

8

Question 2 (1 point)

Saved

What is the rate of interest charged by a lender?

a)

Discounted

b)

Continuous

c)

Effective

d)

Nominal

Question 3 (1 point

What is the amount of money that would have to be deposited today to obtain a specified amount at a later dat

a)

Future value interest factor

b)

Present value interest factor

c)

Present value

d)

Future value

Question 4

A college received a contribution to its endowment fund of $3 million. They can never touch the principal, but they can use the earnings. At an assumed interest rate of 8.5%, how much can the college earn each year?

Question 4 options:

a)

$150,000

b)

$36,000

c)

$255,000

d)

$200,000

e)

$15,000

Question 5

If you deposit $1,200 into an account today that pays 6% interest compounded semiannually, after 25 years how much interest would you have earned?

Question 5 options:

a)

$5,260.69

b)

$4,060.69

c)

$3,950.24

d)

$1,312.53

e)

$20,904.19

Question 6 (1 point)

The cost of a bacon cheeseburger was $.99. If the price of this sandwich increased at a 3% annual rate over the last five years, what would the price be today?

Question 6 options:

a)

$ .84

b)

$1.12

c)

$1.22

d)

$1.15

e)

$1.02

Question 7 (1 point)

How many years will it take to triple a value given an effective annual interest rate of 20%? (Round to the closest year.)

Question 7 options:

a)

6

b)

8

c)

5

d)

11

e)

3

Question 8 (1 point)

How many years will it take to triple an amount if you have $6,000 invested at a rate of 15%? (Round up to obtain a whole number of years if necessary.)

Question 8 options:

a)

3

b)

8

c)

9

d)

8

e)

11

Question 9 (1 point)

A credit union advertises a nominal annual rate of 13.7% on a car loan. Interest is compounded monthly. What is the effective interest rate?

Question 9 options:

a)

15.00%

b)

14.59%

c)

10.00%

d)

12.00%

Question 10 (1 point)

What is the present value of an amount given the following information?Number of compounding years = 2FV deposit = $200Nominal Interest rate = 9%Deposit periods in years = 21

Question 10 options:

a)

$25.65

b)

$38.19

c)

$31.49

d)

$45.20

Question 11 (1 point)

The discount rate on this mixed stream of cash flows is 10%. What is the present value given this data?Year 1 Cash flow stream = $7,000Year 2 Cash flow stream = $3,000Year 3 Cash flow stream = $6,000

Question 11 options:

a)

$13,350.86

b)

$15,321.56

c)

$12,432.00

d)

$14,321.78

Question 12 (1 point)

What is the difference between simple and compound interest?

Question 12 options:

a)

Simple interest is only paid at the end of the investment period.

b)

Compound interest is paid up front and not when the investment matures.

c)

Simple interest earns a higher interest rate on reinvested than compound interest.

d)

Compound interest entails receiving interest payments on previously earned interest.

e)

Simple interest is not taxed by the federal government.

Question 13 (1 point)

The bank loaned you $20,000 for a new car. The signed agreement states 60 monthly payments at $444.89. What is the effective rate on the car loan?

Question 13 options:

a)

15.34%

b)

12.68%

c)

13.56%

d)

11.34%

Question 14 (1 point)

What is the future value of $200 deposited today at 8% compounded semiannually for three years?

Question 14 options:

a)

$253

b)

$165

c)

$380

d)

$248

e)

$232

Question 15 (1 point)

The rate on a mixed stream of cash flows is 12%. $1,200 at the beginning of year 1, $2,200 at the beginning of year 2, and $3,300 at the beginning of year 3. What is the future value of all cash flows?

Question 15 options:

a)

$7,700

b)

$8,141

c)

$10,510

d)

$6,504

e)

$17,000

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