Deck 11: Compound Interest and Present Value

Question 1

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Simon invests $19,500, at 9% interest, compounded annually for 11 years. Calculate the compound amount for his investment.

A) $41,578.53
B) $59,622.88
C) $40,793.88
D) $50,318.39

Answer 1

$50,318.39

Question 2

The amount that must be invested today in order to accumulate a future value with compound interest is known as the ____________________.

Answer 2

present value

Question 3

When calculating future value, the ____________________ the interest rate, the smaller the future value amount.

Answer 3

smaller

Question 4

In describing investments and loans, the stated interest rate is known as the ____________________ or ____________________ rate.

Question 5

The ____________________ the number of compounding periods per year, the higher the interest earned on the investment.

Question 6

The ____________________ of money is worth more than money in the future.

Question 7

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Calculate the compound interest on an investment of $45,000 at 6% interest, compounded quarterly, for 3 years.

A) $8,802.90
B) $8,802.00
C) $53,802.90
D) $2,992.42

Question 8

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Lane invests $7,000, at 7% interest, compounded annually for 22 years. Calculate the compound interest for his investment.

A) $31,012.80
B) $8,753.25
C) $24,012.80
D) $15,655.23

Question 9

Manually calculate the compound interest on an investment of $7,500 at 6% interest, compounded semiannually, for 1 year.

A) $456.75
B) $7,956.75
C) $7,950.00
D) $450.00

Question 10

When calculating present value, the ____________________ the interest rate, the smaller the present value amount.

Question 11

Manually calculate the compound interest on an investment of $12,500 at 7.5% interest, compounded semiannually, for 2 years. (Round value to the nearest cent)

A) $1,983.00
B) $1,983.13
C) $14,483.14
D) $450.00

Question 12

Manually calculate the compound interest on an investment of $8,500 at 6% interest, compounded semiannually, for 18 months.

A) $783.54
B) $788.18
C) $8,759.35
D) $8,788.18

Question 13

To calculate the effective rate of return on an investment, the total compound interest is divided by the ____________________.

Question 14

The ____________________ or ____________________ interest rate reflects the real rate of return on an investment.

Question 15

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Calculate the compound interest on an investment of $28,000 at 4% interest, compounded quarterly, for 2.5 years.

A) $2,299.42
B) $2,942.29
C) $2,929.36
D) $2,992.42

Question 16

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Calculate the compound interest on an investment of $18,000 at 8%, interest compounded quarterly, for 15 months.

A) $1,873.44
B) $18,788.21
C) $883.54
D) $8,725.35

Question 17

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Roby invests $18,700, at 8% interest, compounded quarterly for 8 years. Calculate the compound amount for his investment.

A) $35,241.09
B) $25,671.17
C) $65,600.54
D) $64,065.08

Question 18

Compound interest yields considerably ____________________ interest than simple interest.

Question 19

____________________ interest is interest that is applied a number of times during the term of a loan or investment.

Question 20

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Ben invests $19,500, at 12% interest, compounded quarterly for 10 years. Calculate the compound amount for his investment.

A) $73,369.46
B) $71,214.36
C) $68,305.89
D) $63,609.59

Question 21

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Calculate the compound amount on an investment of $9,500 at 12% interest, compounded quarterly, for 6 years.

A) $9,811.51
B) $9,251.29
C) $19,311.51
D) $18,751.29

Question 22

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Calculate the compound interest on an investment of $7,500 at 8% interest, compounded quarterly, for 8 years.

A) $6,381.98
B) $6,634.13
C) $13,881.98
D) $14,134.13

Question 23

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. You wish to have $16,500 in 6 years. How much should you invest now at 9% interest, compounded annually in order to have $16,500, 6 years from now?

A) $11,172.15
B) $6,661.54
C) $9,838.46
D) $27,672.15

Question 24

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Lanie invests $8,500, at 6% interest, compounded quarterly for 10 years. Calculate the compound amount for her investment.

A) $15,419.26
B) $14,780.12
C) $11,190.12
D) $14,885.03

Question 25

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Omar invests $3,000 at 12% interest, compounded semiannually for 2 years. Calculate the effective interest rate for his investment. (Round to nearest hundredth percent)

A) 10.80%
B) 12.36%
C) 9.65%
D) 12.52%

Question 26

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Laura wants to have $6,500 in 8 years. Calculate how much she should invest now at 8% interest, compounded quarterly in order to reach this goal.

A) $3,534.18
B) $4,448.81
C) $3,449.16
D) $2,120.00

Question 27

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. George invests $12,500, at 12% interest, semiannually for 12 years. Calculate the compound amount for his investment.

A) $48,699.75
B) $50,611.63
C) $25,152.50
D) $25,409.88

Question 28

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Jose invests $7,500, at 12% interest, compounded quarterly for 11 years. Calculate the amount of compound interest.

A) $18,589.13
B) $20,035.80
C) $26,089.13
D) $27,535.80

Question 29

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Sonji wants to have $14,000 in 13 years. Calculate how much he should invest now at 6% interest, compounded semiannually in order to reach this goal.

A) $6,491.66
B) $7,297.80
C) $9,205.88
D) $10,794.12

Question 30

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Antonio invests $3,000, at 10% interest, compounded semiannually for 12 years. Use the compound interest formula to calculate the compound amount for his investment.

A) $6,663.28
B) $6,760.00
C) $9,675.30
D) $9,860.00

Question 31

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Al invests $5,500, at 6% interest, compounded monthly for one year. Calculate the annual percentage yield for his investment. (Round the annual percentage yield to the nearest hundredth percent)

A) 6.40%
B) 6.17%
C) 5.25%
D) 62.00%

Question 32

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Calculate the compound amount of an investment of $7,000 at 8% interest, compounded quarterly, for 9 years.

A) $12,665.23
B) $14,279.30
C) $10,385.58
D) $16,989.00

Question 33

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Rigoberto invests $8,000, at 6% interest, compounded semiannually for 1 year. Use the compound interest formula to calculate the compound interest for his investment.

A) $8,417.50
B) $400.00
C) $487.20
D) $8,400.00

Question 34

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Leonora wants to have $18,000 in 1 year. Calculate how much she should invest now at 10% interest, compounded semiannually in order to reach this goal.

A) $14,700.00
B) $15,725.00
C) $16,326.54
D) $17,800.20

Question 35

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Keishawn wants to have $6,000 in 20 years. Calculate how much he should invest now at 8% interest, compounded annually in order to reach his goal.

A) $1,287.30
B) $1,872.15
C) $1,122.45
D) $2,550.00

Question 36

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Jen wants to have $19,000 in 12 years. Calculate how much she should invest now at 8% interest, compounded quarterly in order to reach this goal.

A) $4,734.18
B) $7,443.81
C) $7,344.26
D) $9,120.00

Question 37

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. You wish to have $12,500 in 12 years. Find how much you should invest now at 12% interest, compounded quarterly in order to have $12,500, 12 years from now.

A) $7,000.00
B) $3,025.00
C) $3,208.50
D) $6,623.25

Question 38

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Calculate the annual percentage yield on an investment of $7,000 at 8% interest, compounded quarterly, for one year. (Round the annual percentage yield to the nearest hundredth percent)

A) 24.73%
B) 8.00%
C) 7.75%
D) 8.24%

Question 39

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Marcus invests $8,000, at 8% interest, compounded annually for 15 years. Calculate the compound interest for his investment.

A) $17,377.36
B) $17,565.40
C) $1,765.40
D) $17,556.40

Question 40

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Anibal invests $5,000 at 12% interest, compounded quarterly for 1 year. Calculate the effective interest rate for his investment. (Round to nearest hundredth percent)

A) 10.12%
B) 12.55%
C) 12.15%
D) 12.50%

Question 41

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Suppose you wish to have $16,500 in 2 years. Use the present value formula to find how much you should invest now at 8% interest, compounded semiannually in order to have $16,500, 2 years from now. Then calculate the amount of interest.

A) $2,395.73
B) $2,353.89
C) $14,104.27
D) $14,146.11

Question 42

The time value of money concept states that money in the future is worth more than money in the present.

Question 43

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. You wish to have $17,000 in 11 years. Find how much you should invest now at 12% interest, compounded quarterly in order to have $17,000, 11 years from now. Then calculate the amount of interest.

A) $4,630.29
B) $12,369.71
C) $4,887.16
D) $12,112.84

Question 44

To find the amount that must be deposited today to result in a given amount in five years, the Present Value Table Factor would be used.

Question 45

The stated interest rate is the real or true rate of return on an investment.

Question 46

The more compounding periods per year, the lower the effective rate of return.

Question 47

Compound interest yields considerably lower interest than simple interest.

Question 48

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Sam wants to have $14,000 in 4 years. Calculate how much he should invest now at 6% interest, compounded monthly in order to reach this goal.

A) $13,612.84
B) $13,458.64
C) $10,541.36
D) $11,019.54

Question 49

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Rosalie wants to have $7,500 in 18 years. Use the present value formula to calculate how much Rosalie should invest now at 8% interest, compounded annually in order to achieve her goal.

A) $3,300.00
B) $5,623.13
C) $3,746.26
D) $1,876.88

Question 50

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Gil wants to have $9,500 in 7 years. Use the present value formula to calculate how much he should invest now at 2% interest, compounded semiannually in order to reach his goal.

A) $8,125.25
B) $8,875.36
C) $8,264.62
D) $8,800.89

Question 51

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Suppose you wish to have $15,000 in 19 years. Use the present value formula to find how much you should invest now at 9% interest, compounded annually in order to have $15,000, 19 years from now.

A) $2,917.35
B) $1,350.00
C) $12,082.65
D) $9,165.30

Question 52

Compound amount is the same as future value.

Question 53

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Inez wants to have $15,000 in 2 years. Use the present value formula to calculate how much Inez should invest now at 6% interest, compounded quarterly in order to reach her goal.

A) $13,349.95
B) $13,315.65
C) $12,231.90
D) $11,877.98

Question 54

The effective or actual interest rate will always be equal to or greater than the nominal rate.

Question 55

To calculate the compound amount of an investment, the principal is multiplied by the number of compounding periods at the actual interest rate.

Question 56

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Seymour wants to have $10,500 in 9 years. Calculate how much he should invest now at 6% interest, compounded quarterly in order to reach this goal.

A) $6,139.38
B) $6,143.45
C) $6,361.01
D) $6,270.47

Question 57

The time value of money concept states that a specific amount of money in the future is less desirable than the same amount of money in the present.

Question 58

Compound interest yields considerably higher interest than simple interest.

Question 59

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Julia wants to have $11,500 in 10 years. Calculate how much she should invest now at 6% interest, compounded quarterly in order to reach this goal.

A) $6,339.49
B) $6,195.30
C) $6,304.71
D) $6,263.03

Question 60

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
Refer to Narrative in your text 11-1. Francis wants to have $22,000 in 10 years. Calculate how much he should invest now at 8% interest, compounded quarterly in order to reach this goal.

A) $9,963.58
B) $6,143.45
C) $8,000.00
D) $6,270.47

Question 61

Using Table 11-1 from your text, calculate the compound amount and compound interest for the investment, rounding to the nearest cent.

Question 62

Manually calculate the compound amount and compound interest for the investment, rounding to the nearest cent:

Question 63

The following investment requires table factors for periods beyond the table. Create the new table factor, rounded to five decimal places, and calculate the compound amount, rounding to the nearest cent:

Question 64

The amount of money you need to put away now to earn a certain amount of money in the future is called compound value.

Question 65

The following investment requires table factors for periods beyond the table. Create the new table factor, rounded to five decimal places, and calculate the compound amount, rounding to the nearest cent:

Question 66

When calculating present value, the higher the interest rate, the higher the present value amount.

Question 67

Using Table 11-1 from your text, calculate the compound amount and compound interest for the investment, rounding to the nearest cent.

Question 68

The more compounding periods per year, the higher the effective rate of return.

Question 69

Manually calculate the compound amount and compound interest for the investment, rounding to the nearest cent:

Question 70

Find the total number of compounding periods and the interest rate per period:

Question 71

Find the total number of compounding periods and the interest rate per period:

Question 72

Find the total number of compounding periods and the interest rate per period:

Question 73

The following investment requires table factors for periods beyond the table. Create the new table factor, rounded to five decimal places, and calculate the compound amount, rounding to the nearest cent:

Question 74

Find the total number of compounding periods and the interest rate per period:

Question 75

Using Table 11-1 from your text, calculate the compound amount and compound interest for the investment, rounding to the nearest cent.

Question 76

Find the total number of compounding periods and the interest rate per period:

Question 77

Find the total number of compounding periods and the interest rate per period:

Question 78

Using Table 11-1 from your text, calculate the compound amount and compound interest for the investment, rounding to the nearest cent.

Question 79

Using Table 11-1 from your text, calculate the compound amount and compound interest for the investment, rounding to the nearest cent.

Question 80

Manually calculate the compound amount and compound interest for the investment, rounding to the nearest cent: