Quiz Questions


1	A loan of $8000 bearing interest at 10% compounded annually was paid in full 18 months after the date of the loan. What amount was paid?
		A)	$44,479.34
		B)	$10,648.00
		C)	$9065.73
		D)	$9313.34
		E)	$9229.52


2	Determine the value of an investment with a maturity value of $7500 if it is discounted at 16% compounded annually 27 months before the date of maturity.
		A)	$10,473.50
		B)	$2973.50
		C)	$5245.04
		D)	$6014.75
		E)	$5370.70


3	Over the past ten years, Fred's annual salary has increased from $20,000 to $53,000. At what average compound annual rate has his salary grown during the period.
		A)	16.5%
		B)	9.07%
		C)	10.13%
		D)	10.71%
		E)	10.24%


4	A three-year $4000 face-value investment earning 12% compounded semiannually was sold 15 months before maturity for $4350. What monthly compounded rate of return will the buyer realize on her investment?
		A)	12.21%
		B)	1.79%
		C)	54.36%
		D)	12.54%
		E)	21.45%


5	At what monthly compounded nominal rate of interest will money triple in twelve years?
		A)	1.096%
		B)	0.766%
		C)	109.587%
		D)	9.587%
		E)	9.190%


6	In how many years will money double if it earns 18% compounded semiannually?
		A)	4.022
		B)	4.188
		C)	8.043
		D)	16.086
		E)	2.094


7	You are offered a loan at a rate of 9% compounded monthly. Below what nominal rate of interest would you choose semiannual compounding instead?
		A)	9.17%
		B)	9.21%
		C)	9.38%
		D)	9.56%
		E)	9.00%


8	A company reports that its sales have grown 5% per quarter for the last eight fiscal quarters. What annually compounded growth rate has the company been experiencing for the last two years?
		A)	18.65%
		B)	23.23%
		C)	20.00%
		D)	21.55%
		E)	40.00%


9	What is the effective rate of interest if $3000 grows to $4500 in five years with quarterly compounding?
		A)	8.192%
		B)	8.447%
		C)	32.768%
		D)	16.977%
		E)	33.789%


10	Fred's stock portfolio increased in value over a two-month period from $53,900 to $64,800. What was the annualized rate of increase in value over the period?
		A)	302.0%
		B)	225.8%
		C)	201.9%
		D)	121.3%
		E)	16.8%

2003 McGraw-Hill Higher Education
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