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1 | |
How much interest is charged on a term loan of $6000 for 1.5 years at 9% compounded monthly? |
| | A) | $755.06 |
| | B) | $827.96 |
| | C) | $812.67 |
| | D) | $863.76 |
| | E) | $67.63 |
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2 | |
If the total interest earned on an investment at 11% compounded semiannually for 7.5 years is $1245, what was the original investment? |
| | A) | $2779.43 |
| | B) | $901.33 |
| | C) | $1010.16 |
| | D) | $2255.16 |
| | E) | $557.68 |
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3 | |
A debt of $9000 accumulates interest at 12% compounded monthly from January 1, 1998 to January 1, 2000. Thereafter, the interest rate is 16% compounded quarterly. Determine the amount owed on April 1, 2001. |
| | A) | $10,949.88 |
| | B) | $20,580.48 |
| | C) | $14,086.40 |
| | D) | $13,903.44 |
| | E) | $25,331.05 |
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4 | |
A deposit of $4000 earns interest at 12% compounded semiannually for the first two years, and then 9% compounded monthly thereafter. How much will be in the account five years after the deposit was made? |
| | A) | $12,828.54 |
| | B) | $131,950.76 |
| | C) | $5049.91 |
| | D) | $6608.54 |
| | E) | $7906.54 |
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5 | |
A deposit of $5000 earns interest at 10% compounded quarterly. After two years the interest rate is changed to 12% compounded monthly. How much will be in this account five years after the deposit was made? |
| | A) | $8193.08 |
| | B) | $9083.48 |
| | C) | $7153.84 |
| | D) | $8716.26 |
| | E) | $11,067.34 |
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6 | |
What amount 18 months ago is equivalent to $5000 two years from now if money earns 10% compounded semiannually during the intervening time? |
| | A) | $5788.13 |
| | B) | $3553.41 |
| | C) | $4319.19 |
| | D) | $4211.87 |
| | E) | $4132.23 |
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7 | |
An obligation can be settled by payments of $3000 today, $3000 in two years, and $3000 in five years. What single payment would settle the debt two years from today if money is worth 12% compounded semiannually? |
| | A) | $8042.99 |
| | B) | $11,042.99 |
| | C) | $8902.31 |
| | D) | $7491.16 |
| | E) | $5902.31 |
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8 | |
Janelle invested $13,000 in a five-year GIC earning a nominal interest rate of 6.5%. If interest is paid quarterly, what is the size of each interest payment? |
| | A) | $191.18 |
| | B) | $211.25 |
| | C) | $764.71 |
| | D) | $281.67 |
| | E) | $845.00 |
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9 | |
A $10,000 face value strip bond has 25 years remaining until maturity. What is its price if the market rate of return on such bonds is 8% compounded semiannually? |
| | A) | $1460.18 |
| | B) | $1290.98 |
| | C) | $1407.13 |
| | D) | $3751.17 |
| | E) | $71,066.83 |
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10 | |
A six-year promissory note for $7800 with interest at 8% quarterly, was sold after two years to yield the buyer 12% compounded semiannually. What price did the buyer pay? |
| | A) | $7871.40 |
| | B) | $7729.25 |
| | C) | $12,545.81 |
| | D) | $9937.46 |
| | E) | $4849.43 |
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11 | |
Jim wants to retire in 10 years at an income level that would be equivalent to $40,000 per year today. What is his retirement income goal if, in the meantime, the annual rate of inflation is 6%? |
| | A) | $62,335.79 |
| | B) | $71,633.91 |
| | C) | $81,963.34 |
| | D) | $22,335.79 |
| | E) | $83,333.33 |
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12 | |
Payments of $2500 and $6000 are due two and four years from today. They are to be replaced by two payments due one year and three years from today. The first payment is to be twice the amount of the second payment. What is the size of the first replacement payment if money can earn 8% compounded quarterly? |
| | A) | $4439.68 |
| | B) | $3520.29 |
| | C) | $4934.70 |
| | D) | $2219.84 |
| | E) | $2467.35 |
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13 | |
Obligations of $1000 due now and $6000 due one year from now are to be settled by two equal payments, one six months from now and the other one year from now. What is the size of each payment if money can earn 12% compounded quarterly? |
| | A) | $3457.47 |
| | B) | $6716.48 |
| | C) | $3562.75 |
| | D) | $3668.03 |
| | E) | $3290.35 |
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14 | |
Sam has $1000 to invest. He found that the trust company pays 5% compounded annually, the local credit union pays 4.95% compounded semiannually, and the bank pays 4.90% compounded quarterly. Which rate will pay Sam the highest amount of interest? Rank the alternatives.(best to worst). |
| | A) | trust company; credit union; bank |
| | B) | credit union; trust company; bank |
| | C) | trust company; bank; credit union |
| | D) | bank; trust company; credit union |
| | E) | credit union; bank; trust company |
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15 | |
Marika is buying a car. She has the option of paying $14,000 in cash at the time of purchase, or a second option of paying $7,000 now and $8000 in two years. If she can borrow the money at 8% compounded quarterly, which option should she take, and why? |
| | A) | option 1; less expensive by $1000 |
| | B) | option 1; less expensive by $2,373.28 |
| | C) | option 2; less expensive by $172.08 |
| | D) | option 1; less expensive by $2201.62 |
| | E) | option 2; less expensive by $141.89 |
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2003 McGraw-Hill Higher Education