Question 1

A table factor of 0.7312 from the present value table in this chapter means that a certain rate of interest for a certain period of time will equal:

Accepted Answer

A) $1 
B) Over $1 
C) Less than $1 
D) Never equal 
E) None of these 
A) $1 
B) Over $1 
C) Less than $1 
D) Never equal 
E) None of these A

Question 2

Abe Frill wants to attend AVP Tech. He will need to have $15,000 seven years from today. How much should Abe put in the bank today (12% quarterly)to reach his goal in the future?

Accepted Answer

$6,556.50

Question 3

Paul Lospennato wants to buy a house five years from today for $90,000. Paul wants you to calculate how much he needs today to put in the bank (10% compounded semiannually)to reach his goal in the future.

Accepted Answer

$55,251

Question 4

A table factor of 0.7513 from a present value table means that if $.75 is invested at a certain rate of interest for a certain number of periods, it would be worth $1 in the past.

Accepted Answer

A) True 
 B)False

Question 5

Present value does not:

Accepted Answer

A) Know future amount 
B) Know the present dollar amount 
C) Find present dollar amount 
D) Use tables 
E) None of these 
A) Know future amount 
B) Know the present dollar amount 
C) Find present dollar amount 
D) Use tables 
E) None of these

Question 6

Solve by using compound table:
 $$\begin{array} { | l | l | l | l | l | } 
\hline \text { Principal } & \text { Rate } & \text { Time } & \begin{array} { l } 
\text { When } \
\text { Compounded }
\end{array} & \text { Total Amount } \
\hline \$ 8,000 & 10 \% & 3 \text { years } & \text { Semiannually } & \text { ? } \
\hline
\end{array}$$

Accepted Answer

The answer of Solve by using compound table:
 \[\begin{array} {...

Question 7

Complete without using table:
 $$\begin{array} { | l | l | l | l | l | l | l | } 
\hline \text { Principal } & \text { Time } & \begin{array} { l } 
\text { Rate of } \
\text { Compound }
\end{array} & \begin{array} { l } 
\text { When } \
\text { Compounded }
\end{array} & \begin{array} { l } 
\text { \# of Periods to be } \
\text { Compounded }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { Amount }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { Interest }
\end{array} \
\hline \$ 300 & 1 \text { year } & 16 \% & \text { Quarterly } & \text { A } & \text { B } & \text { C } \
\hline
\end{array}$$

Accepted Answer

A. 4; B. $

Question 8

Molly Scupper wants to attend Clarke University. She will need $90,000 eight years from today. Assume Molly's bank pays 6% interest compounded semiannually. What must Molly deposit today to have $90,000 in eight years? Verify your answer.

Accepted Answer

$90,000 × .6232 = $56,088; Ver

Question 9

Interest = principal × rate divided by the time.

Accepted Answer

A) True 
 B)False

Question 10

Match the following terms with their definitions.
-Semiannually

Accepted Answer

A) Year times number of times compounded in one year 
B) Twice a year 
C) Stated rate 
D) True rate of interest 
E) Amount calculated on adjusted principal
F)Periodically interest is calculated and added to principal
G)Rate divided by number of times compounded per year
H)Know future amount looking for present
I)Four times per year
J)Twelve times per year 
A) Year times number of times compounded in one year 
B) Twice a year 
C) Stated rate 
D) True rate of interest 
E) Amount calculated on adjusted principal
F)Periodically interest is calculated and added to principal
G)Rate divided by number of times compounded per year
H)Know future amount looking for present
I)Four times per year
J)Twelve times per year

Question 11

Jane is having difficulty deciding whether to put her savings in the Mystic Bank or in the Four Rivers Bank. Mystic offers a 12% rate compounded quarterly, and Four Rivers offers 14% compounded semiannually. Jane has $40,000 to invest and expects to withdraw the money at the end of five years. (Use the tables in the handbook.)The best deal is:

Accepted Answer

A) Four Rivers 
B) Four Rivers for first two years 
C) Mystic 
D) Mystic for last two years 
E) None of these 
A) Four Rivers 
B) Four Rivers for first two years 
C) Mystic 
D) Mystic for last two years 
E) None of these

Question 12

Travis Brown deposited $17,500 into Browning Bank, which pays 4% compounded quarterly. Calculate how much Travis will have in his account at the end of seven years.

Accepted Answer

4% / 4 = 1%, 7 × 4 =

Question 13

Match the following terms with their definitions.
-Periods

Accepted Answer

A) Year times number of times compounded in one year 
B) Twice a year 
C) Stated rate 
D) True rate of interest 
E) Amount calculated on adjusted principal
F)Periodically interest is calculated and added to principal
G)Rate divided by number of times compounded per year
H)Know future amount looking for present
I)Four times per year
J)Twelve times per year 
A) Year times number of times compounded in one year 
B) Twice a year 
C) Stated rate 
D) True rate of interest 
E) Amount calculated on adjusted principal
F)Periodically interest is calculated and added to principal
G)Rate divided by number of times compounded per year
H)Know future amount looking for present
I)Four times per year
J)Twelve times per year

Question 14

Solve by using compound table:
 $$\begin{array} { | l | l | l | l | l | l | l | } 
\hline \text { Principal } & \text { Time } & \begin{array} { l } 
\text { Rate of } \
\text { Compound }
\end{array} & \begin{array} { l } 
\text { When } \
\text { Compounded }
\end{array} & \begin{array} { l } 
\text { \# of Periods to be } \
\text { Compounded }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { Amount }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { Interest }
\end{array} \
\hline \$ 300 & 1 \text { year } & 6 \% & \text { Quarterly } & \text { A } & \text { B } & \text { C } \
\hline
\end{array}$$

Accepted Answer

A. 4; B. $

Question 15

Using the table in your handbook, $6,000 for six years at 8½% compounded daily will grow to:

Accepted Answer

A) $8,991.02 
B) $8,950.10 
C) $9,991.20 
D) $9,990.02 
E) None of these 
A) $8,991.02 
B) $8,950.10 
C) $9,991.20 
D) $9,990.02 
E) None of these

Question 16

Helga Thalhimer will need to replace the registration software for her agency in five years. She received an estimate that it will cost $40,000 when she is ready to replace. What must Helga deposit today at 6% compounded quarterly to have enough to update her system?

Accepted Answer

6% / 4 = 1/5%, 5 × 4

Question 17

Use the present value table to complete:
 $$\begin{array} { | l | l | l | l | l | l | l | } 
\hline  \text { Future } & & & & & & \
\text { Amount } & \text { Length of } & \text { Rate } & \text { Table } & \text { Rate } & \text { P.V. } & \text { P.V. } \
 \text { Desired } & \text { Time } & \text { Compounded } & \text { Period } & \text { Used } & \text { Factor } & \text { Amount } \
\hline \$ 11,000 & 6 \text { yrs } & 12 \% \text { quarterly } & \text { A } & \text { B } & \text { C } & \text { D } \
\hline
\end{array}$$

Accepted Answer

A. 24; B.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The rate 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 20

Janet Ring estimates she will need $35,000 for a new computerized office system. Janet decided to put aside the money today so that it will be available in 10 years. Pod Bank offers Janet 8% interest compounded semiannually. How much must Janet invest today to have $35,000 in 10 years?

Accepted Answer

8% / 2 = 4%; 10 × 2

Exam 12: Compound Interest and Present Value

A table factor of 0.7312 from the present value table in this chapter means that a certain rate of interest for a certain period of time will equal:

Abe Frill wants to attend AVP Tech. He will need to have $15,000 seven years from today. How much should Abe put in the bank today (12% quarterly)to reach his goal in the future?

Paul Lospennato wants to buy a house five years from today for $90,000. Paul wants you to calculate how much he needs today to put in the bank (10% compounded semiannually)to reach his goal in the future.

A table factor of 0.7513 from a present value table means that if $.75 is invested at a certain rate of interest for a certain number of periods, it would be worth $1 in the past.

Present value does not:

Solve by using compound table: Principal Rate Time When Compounded Total Amount \ 8,000 10\% 3 years Semiannually ?

Complete without using table: Principal Time Rate of Compound When Compounded \# of Periods to be Compounded Total Amount Total Interest \ 300 1 year 16\% Quarterly A B C

Molly Scupper wants to attend Clarke University. She will need $90,000 eight years from today. Assume Molly's bank pays 6% interest compounded semiannually. What must Molly deposit today to have $90,000 in eight years? Verify your answer.

Interest = principal × rate divided by the time.

Match the following terms with their definitions. -Semiannually

Travis Brown deposited $17,500 into Browning Bank, which pays 4% compounded quarterly. Calculate how much Travis will have in his account at the end of seven years.

Match the following terms with their definitions. -Periods

Solve by using compound table: Principal Time Rate of Compound When Compounded \# of Periods to be Compounded Total Amount Total Interest \ 300 1 year 6\% Quarterly A B C

Using the table in your handbook, $6,000 for six years at 8½% compounded daily will grow to:

Helga Thalhimer will need to replace the registration software for her agency in five years. She received an estimate that it will cost $40,000 when she is ready to replace. What must Helga deposit today at 6% compounded quarterly to have enough to update her system?

Use the present value table to complete: Future Amount Length of Rate Table Rate P.V. P.V. Desired Time Compounded Period Used Factor Amount \ 11,000 6 yrs 12\% quarterly A B C D

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

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

Janet Ring estimates she will need $35,000 for a new computerized office system. Janet decided to put aside the money today so that it will be available in 10 years. Pod Bank offers Janet 8% interest compounded semiannually. How much must Janet invest today to have $35,000 in 10 years?

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

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How to Read, Analyze, and Interpret Financial Reports

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