Question 1

Present value starts with the future and tries to calculate its worth in the present.

Accepted Answer

A) True 
 B)False  True

Question 2

The number of periods for a table lookup on $5,000 at 12% compounded semiannually for 10 years is 10 periods.

Accepted Answer

A) True 
 B)False  False

Question 3

$100,000 for 20 years compounded at 4% annually results in a rate per period of:

Accepted Answer

A)  3% 
B)  5% 
C)  4% 
D)  1% 
E)  None of these 
A)  3% 
B)  5% 
C)  4% 
D)  1% 
E)  None of these C

Question 4

Compounding always reduces the principal.

Accepted Answer

A) True 
 B)False

Question 5

A compound table factor of 1.2950 means that $1 at a certain rate of interest for a certain period of time will increase in value to approximately $1.30.

Accepted Answer

A) True 
 B)False

Question 6

Ellen deposits $6,773 into an account earning 1% annually. After seven years what will Ellen's balance have grown to, including interest?

Accepted Answer

A)  $7,516.68 
B)  $7,516.88 
C)  $7,261.33 
D)  $6,836.78 
E)  None of these 
A)  $7,516.68 
B)  $7,516.88 
C)  $7,261.33 
D)  $6,836.78 
E)  None of these

Question 7

Compounding:

Accepted Answer

A)  Calculates interest periodically 
B)  Looks into the present when the future is known 
C)  Is done only on an annual basis 
D)  Results in less interest than simple interest 
E)  None of these 
A)  Calculates interest periodically 
B)  Looks into the present when the future is known 
C)  Is done only on an annual basis 
D)  Results in less interest than simple interest 
E)  None of these

Question 8

$20,000 for 14 years compounded at 8% semiannually results in how many periods?

Accepted Answer

A)  64 
B)  28 
C)  12 
D)  14 
E)  None of these 
A)  64 
B)  28 
C)  12 
D)  14 
E)  None of these

Question 9

Marcia Gadzera wants to retire in San Diego when she is 65 years old. Marcia is now 50 and believes she will need $90,000 to retire comfortably. To date, she has set aside no retirement money. If she gets interest of 10% compounded semiannually, how much must she invest today to meet her goal of $90,000?

Accepted Answer

The answer of Marcia Gadzera wants to retire in San...

Question 10

The rate for a table lookup on a $4,000, 12% investment compounded quarterly for four years is 4%.

Accepted Answer

A) True 
 B)False

Question 11

Using the table in the handbook, the present value of $12,000 for six years compounded at 6% semiannually is:

Accepted Answer

A)  $12,814.08 
B)  $8,461.08 
C)  $8,416.80 
D)  $8,614.80 
E)  None of these 
A)  $12,814.08 
B)  $8,461.08 
C)  $8,416.80 
D)  $8,614.80 
E)  None of these

Question 12

The interest on $6,000 at 6% compounded semiannually for eight years is (use table in the handbook):

Accepted Answer

A)  $3,628.20 
B)  $3,682.02 
C)  $362.82 
D)  $13,628.20 
E)  None of these 
A)  $3,628.20 
B)  $3,682.02 
C)  $362.82 
D)  $13,628.20 
E)  None of these

Question 13

$14,182 is the present value of $21,000 that earns at a bank 12% compounded quarterly for four years. (Use table in handbook.)

Accepted Answer

A) True 
 B)False

Question 14

Compounding results in earning higher interest than simple interest.

Accepted Answer

A) True 
 B)False

Question 15

The compound table can be used to prove a present value calculation.

Accepted Answer

A) True 
 B)False

Question 16

Earl Miller deposited $25,000 at Y Bank at an interest rate of 12% compounded quarterly. (Use the tables in the handbook.) The effective rate (APY) is:

Accepted Answer

A)  12% 
B)  12.55% 
C)  12.15% 
D)  13.2% 
E)  None of these 
A)  12% 
B)  12.55% 
C)  12.15% 
D)  13.2% 
E)  None of these

Question 17

Mel Ross thinks he would like to buy a used car in five years for $8,000. He wants to put the money aside now so that in five years the $8,000 will be available. His bank offers him 12% interest, compounded semiannually. Could you calculate what Mel must invest today?

Accepted Answer

The answer of Mel Ross thinks he would like to...

Question 18

The rate to be used in compounding is found by taking the annual rate divided by the number of times compounded per day.

Accepted Answer

A) True 
 B)False

Question 19

Using the table in the handbook, the table factor for compounding $4,000 at 9% compounded annually for one year is 1.0900.

Accepted Answer

A) True 
 B)False

Question 20

Interest on $2,630 at 3% compounded semiannually for five years is:

Accepted Answer

A)  $304.90 
B)  $414.49 
C)  $569.92 
D)  $418.96 
E)  None of these 
A)  $304.90 
B)  $414.49 
C)  $569.92 
D)  $418.96 
E)  None of these

Present value starts with the future and tries to calculate its worth in the present.

The number of periods for a table lookup on $5,000 at 12% compounded semiannually for 10 years is 10 periods.

$100,000 for 20 years compounded at 4% annually results in a rate per period of:

Compounding always reduces the principal.

A compound table factor of 1.2950 means that $1 at a certain rate of interest for a certain period of time will increase in value to approximately $1.30.

Ellen deposits $6,773 into an account earning 1% annually. After seven years what will Ellen's balance have grown to, including interest?

Compounding:

$20,000 for 14 years compounded at 8% semiannually results in how many periods?

The rate for a table lookup on a $4,000, 12% investment compounded quarterly for four years is 4%.

Using the table in the handbook, the present value of $12,000 for six years compounded at 6% semiannually is:

The interest on $6,000 at 6% compounded semiannually for eight years is (use table in the handbook):

$14,182 is the present value of $21,000 that earns at a bank 12% compounded quarterly for four years. (Use table in handbook.)

Compounding results in earning higher interest than simple interest.

The compound table can be used to prove a present value calculation.

Earl Miller deposited $25,000 at Y Bank at an interest rate of 12% compounded quarterly. (Use the tables in the handbook.) The effective rate (APY) is:

Mel Ross thinks he would like to buy a used car in five years for $8,000. He wants to put the money aside now so that in five years the $8,000 will be available. His bank offers him 12% interest, compounded semiannually. Could you calculate what Mel must invest today?

The rate to be used in compounding is found by taking the annual rate divided by the number of times compounded per day.

Using the table in the handbook, the table factor for compounding $4,000 at 9% compounded annually for one year is 1.0900.

Interest on $2,630 at 3% compounded semiannually for five years is:

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Promissory Notes, Simple Discount Notes, and the Discount Process

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Depreciation

Inventory and Overhead

Sales, Excise, and Property Taxes

Filters

Exam 12: Compound Interest and Present Value

Present value starts with the future and tries to calculate its worth in the present.

The number of periods for a table lookup on $5,000 at 12% compounded semiannually for 10 years is 10 periods.

$100,000 for 20 years compounded at 4% annually results in a rate per period of:

Compounding always reduces the principal.

A compound table factor of 1.2950 means that $1 at a certain rate of interest for a certain period of time will increase in value to approximately $1.30.

Ellen deposits $6,773 into an account earning 1% annually. After seven years what will Ellen's balance have grown to, including interest?

Compounding:

$20,000 for 14 years compounded at 8% semiannually results in how many periods?

The rate for a table lookup on a $4,000, 12% investment compounded quarterly for four years is 4%.

Using the table in the handbook, the present value of $12,000 for six years compounded at 6% semiannually is:

The interest on $6,000 at 6% compounded semiannually for eight years is (use table in the handbook):

$14,182 is the present value of $21,000 that earns at a bank 12% compounded quarterly for four years. (Use table in handbook.)

Compounding results in earning higher interest than simple interest.

The compound table can be used to prove a present value calculation.

Earl Miller deposited $25,000 at Y Bank at an interest rate of 12% compounded quarterly. (Use the tables in the handbook.) The effective rate (APY) is:

Mel Ross thinks he would like to buy a used car in five years for $8,000. He wants to put the money aside now so that in five years the $8,000 will be available. His bank offers him 12% interest, compounded semiannually. Could you calculate what Mel must invest today?

The rate to be used in compounding is found by taking the annual rate divided by the number of times compounded per day.

Using the table in the handbook, the table factor for compounding $4,000 at 9% compounded annually for one year is 1.0900.

Interest on $2,630 at 3% compounded semiannually for five years is:

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Promissory Notes, Simple Discount Notes, and the Discount Process

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Depreciation

Inventory and Overhead

Sales, Excise, and Property Taxes

Filters