Question 1

What annual rate of return is earned on a $900 investment when it grows to $2,500 in 15 years?

Accepted Answer

A) 1.78 percent 
B) 2.78 percent 
C) 6.58 percent 
D) 7.05 percent 
A) 1.78 percent 
B) 2.78 percent 
C) 6.58 percent 
D) 7.05 percent

Question 2

The interest rate, i, which we use to calculate present value, is often referred to as the:

Accepted Answer

A) discount rate. 
B) multiplier. 
C) compound rate. 
D) dividend. 
A) discount rate. 
B) multiplier. 
C) compound rate. 
D) dividend.

Question 3

How long will it take $100 to reach $500 when it grows at 10 percent per year?

Accepted Answer

A) 7.20 years 
B) 16.89 years 
C) 17.46 years 
D) 40.00 years 
A) 7.20 years 
B) 16.89 years 
C) 17.46 years 
D) 40.00 years

Question 4

What is the present value of a $250 payment in one year when the discount rate is 6 percent?

Accepted Answer

A) $245.00 
B) $235.85 
C) $250.00 
D) $265.00 
A) $245.00 
B) $235.85 
C) $250.00 
D) $265.00

What annual rate of return is earned on a $900 investment when it grows to $2,500 in 15 years?

The interest rate, i, which we use to calculate present value, is often referred to as the: