Deck 21: Savings Models

Question 1

Margaret made an investment with a 10% annual yield. However, the real growth rate of her investment was only 4.5%. What was the inflation rate?

Answer 1

5.26%

Question 2

Suppose that you want to save up $3500 for a semester abroad two years from now. How much do you have to put away each month in a fund that earns 5% interest compounded monthly? Round to nearest cents.

Answer 2

$138.97

Question 3

Suppose you invest $6000 and would like your investment to grow to $8000 in five years. What interest rate, compounded monthly, would you have to earn in order for this to happen?

Answer 3

5.77%

Question 4

Suppose that you have $3000 on deposit at your bank at an annual rate of 1.3%. If the bank compounds continuously, what is the balance of your account after two years? Round to nearest cents.

Question 5

Use the geometric series formula to find the sum of

Question 6

Michelle invests in a savings account that pays 4% interest compounded monthly. What is the APY for this account?

Question 7

Use the geometric series formula to find the sum of

Question 8

Zoe invests in a savings account that pays 7% interest compounded quarterly. What is the APY for this account?

Question 9

Kamel bought a house in 1982 for $67,000 and sold it in 2014. If the 1982 CPI is 96.5 and the 2014 CPI is 236.7, how much would the house be worth in 2014 dollars?

Question 10

In 1960 the inflation rate was about 5.1%. If you invested in a savings account with an annual interest rate of 4.9%, what was the real growth rate of this investment?

Question 11

Moira invests in a savings account that pays 6% interest compounded weekly. What is the APY for this account?

Question 12

Suppose you invest $5000 and would like your investment to grow to $10,000 in eight years. What interest rate, compounded weekly, would you have to earn in order for this to happen?

Question 13

In 1984 the inflation rate was about −0.24%. If you invested in a savings account with an annual interest rate of 9.4%, what was the real growth rate of this investment?

Question 14

If your account compounds continuously at an annual rate of 7.85%, what is the APY of your account? Use two decimal places.

Question 15

A man borrowed $29,000 for two years under simple interest. At the end of the two years his balance due was $31,900. What annual simple interest rate did he pay?

Question 16

If the rate of a 24-month CD is 0.80% compounded daily, how much would need to be set aside in such a CD to have $15,000 at the end of 24-month term? Round to nearest cents.

Question 17

Brad invests in a savings account that pays 8% interest compounded quarterly. What is the APY for this account?

Question 18

Suppose that you have $3000 on deposit at your bank at an annual rate of 1.5%. If the bank compounds continuously, how much interest do you receive after one year? Round to nearest cents.

Question 19

A man borrowed $9000 for four years under simple interest. At the end of the four years his balance due was $11,160. What annual simple interest rate did he pay?

Question 20

Matthew made an investment with an 8% annual yield. However, the real growth rate of his investment was only 5%. What was the inflation rate?

Question 21

Alex wants to make an investment that will have a real growth rate of 6.2%. If the current inflation rate is 4.5%, what annual interest rate will he need to get on his investment to accomplish his goal?

Question 22

Donna made an investment with a 3% annual yield. The effective growth rate over the first year was 0%. What was the inflation rate?

Question 23

In 1984 the inflation rate was about −0.24%. If you invested in a savings account with an annual interest rate of 6.8%, what was the real growth rate of this investment?

Question 24

Use the following information for Questions
You want to invest a lump sum at 5% interest so as to have $100,000 in 20 years.
If instead you find an investment with daily compounding, how much less would you need to invest than the amount in Question 39?

Question 25

Use the following information for Questions
You want to invest a lump sum at 5% interest so as to have $100,000 in 20 years.
If you find an investment with annual compounding, how much should you invest?

Question 26

Stephen wants to make an investment that will have a real growth rate of 15%. If the current inflation rate is 5.4%, what annual interest rate will he need to get on his investment to accomplish his goal?

Question 27

Mildred bought a house in 1962 for $17,000 and sold it in 2014. If the 1962 CPI is 30.2 and the 2014 CPI is 236.7, how much would the house be worth in 2014 dollars?

Question 28

Lola made an investment with a 7% annual yield. However, the real annual growth rate of her investment was −2%. What was the inflation rate?

Question 29

You have $3500 that you invest at 7% simple interest. How long will it take for your balance to reach $4235?

A) two years
B) three years
C) four years
D) five years

Question 30

Stephen made an investment with a 9% annual yield. However, the real growth rate of his investment was only 4%. What was the inflation rate?

Question 31

Nebo bought a house in 1999 for $67,000 and sold it in 2014. If the 1999 CPI is 166.6 and the 2014 CPI is 236.7, how much would the house be worth in 2014 dollars?

Question 32

Jack wants to make an investment that will have a real growth rate of 8%. If the current inflation rate is 2.1%, what annual interest rate will he need to get on his investment to accomplish his goal?

Question 33

Michael wants to make an investment that will have a real growth rate of 10%. If the current inflation rate is 11.4%, what annual interest rate will he need to get on his investment to accomplish his goal?

Question 34

The hyperinflation in Germany between the two World Wars had inflation rates as high as 300,000%. In such an inflation, what would the purchasing power of a mark be after 1 year?

Question 35

In 2000, Patti had the choice to invest $100,000 in the housing market for five years, or invest in a CD paying 4% compounded annually. If the 2000 CPI is 172.2 and the 2005 CPI is 195.0, which is the better choice?

Question 36

In 2000, Patti had the choice to invest $100,000 in the housing market for five years, or invest in a CD paying 3% compounded annually. If the 2000 CPI is 172.2 and the 2005 CPI is 195.0, which is the better choice?

Question 37

Owen sold a house in 2014 for $104,000 that he had purchased in 1990. If the 1990 CPI is 130.7 and the 2014 CPI is 236.7, how much would the house be worth in 1990 dollars?

Question 38

You have $2500 that you invest at 6% simple interest. What is the balance after four years?

A) $310
B) $600
C) $3100
D) $6000

Question 39

Marlene made an investment with a 12% annual yield. However, the real growth rate of her investment was only 6.5%. What was the inflation rate?

Question 40

In 1960 the inflation rate was about 5.1%. If you invested in a savings account with an annual interest rate of 7.3%, what was the real growth rate of this investment?

Question 41

Merrie borrowed $500 from her parents, agreeing to pay them back when she graduated from college in four years. If she paid interest compounded daily at 16%, how much would she owe at the end of the four years?

A) $948
B) $1029
C) $1237
D) $1581

Question 42

What is the APY for 6% compounded continuously?

A) 6.00%
B) 6.10%
C) 6.18%
D) 6.40%

Question 43

Merrie borrowed $1000 from her parents, agreeing to pay them back when she graduated from college in five years. If she paid interest compounded quarterly at 5%, how much would she owe at the end of the five years?

A) $1050
B) $1282
C) $1503
D) $1581

Question 44

You have $4300 that you invest at 5% simple interest. How long will it take for your balance to reach $7525?

A) 14 years
B) 15 years
C) 16 years
D) 17 years

Question 45

What is the APY for 9.7% compounded annually?

A) 9.5%
B) 9.7%
C) 10.2%
D) 10.9%

Question 46

What is the APY for 4% compounded continuously?

A) 4.00%
B) 4.08%
C) 4.12%
D) 8%

Question 47

What is the APY for 12.3% compounded weekly?

A) 11.8%
B) 12.3%
C) 12.7%
D) 13.1%

Question 48

What is the APY for 6.25% compounded daily?

A) 6.25%
B) 6.45%
C) 6.95%
D) 7.25%

Question 49

Juanita has $100 deducted from her paycheck at the end of each month and put into a savings account earning 11% interest compounded monthly. She continues these deposits for five years. How much is the account worth at the end of the five years?

A) $7952
B) $9827
C) $10,450
D) $11,150

Question 50

What is the APY for 6% compounded weekly?

A) 6.00%
B) 6.09%
C) 6.18%
D) 7.25%

Question 51

Suppose you invest in an account that pays 6% interest, compounded quarterly. You would like your investment to grow to $8000 in 14 years. How much would you have to invest in order for this to happen?

A) $2125
B) $2290
C) $2650
D) $3475

Question 52

The Martin family has decided to save up for a new swimming pool. They want to save $14,000 in four years. They find a savings account for which interest was compounded monthly at 7.6%. How much will they have to deposit each month to meet this goal?

A) $250.49
B) $308.33
C) $517.25
D) $612.11

Question 53

What is the APY for 9.6% compounded daily?

A) 9.6%
B) 10.1%
C) 12.2%
D) 13.0%

Question 54

What is the APY for 10.2% compounded quarterly?

A) 9.5%
B) 9.7%
C) 10.2%
D) 10.6%

Question 55

Tara has $85 deducted from her paycheck at the end of each month and put into a savings account earning 9% interest compounded monthly. She continues these deposits for 10 years. Approximately how much is the account worth at the end of the 10 years?

A) $208
B) $2496
C) $16,450
D) $21,150

Question 56

What is the APY for 7.5% compounded quarterly?

A) 7.3%
B) 7.5%
C) 7.7%
D) 8.1%

Question 57

What is the APY for 5.3% compounded quarterly?

A) 5.3%
B) 5.4%
C) 5.5%
D) 5.6%

Question 58

A man cuts back on his latte habit and instead makes $20 deposits each month into a savings account earning 6% interest compounded monthly. He continues these deposits for eight years. How much will the account be worth after eight years?

A) $1920
B) $2457
C) $2941
D) $3250

Question 59

You have $7000 that you invest at 9% simple interest. What is the balance after 14 years?

A) $12,390
B) $15,820
C) $63,000
D) $882,000

Question 60

Suppose you invest in an account that pays 5% interest, compounded quarterly. You would like your investment to grow to $5000 in 16 years. How much would you have to invest in order for this to happen?

A) $2258
B) $2374
C) $3125
D) $4153

Question 61

If you save $350 per month in an account paying 2.75% interest compounded monthly, how much will you have in that account 12 years later?

A) $57,842.75
B) $58,952.45
C) $59,631.31
D) $60,412.54

Question 62

A computer was purchased in 1996 for $2500. Its value in current dollars depreciates steadily at a rate of 30% per year. What will the computer's value be at the beginning of 2003?

A) $205.89
B) $301.20
C) $420.87
D) $580.26

Question 63

Suppose that you have $4000 on deposit at your bank at an annual rate of 1.5%. If the bank compounds continuously, how much interest do you receive after three years?

A) $161.99
B) $168.74
C) $175.40
D) $184.11

Question 64

Suppose that you have $2000 on deposit at your bank at an annual rate of 2.34%. If the bank compounds continuously, what is the balance of your account after two years?

A) $2072.98
B) $2077.50
C) $2081.59
D) $2095.82

Question 65

Betty bought a house in 1987 for $99,000 and sold it in 2014. If the 1987 CPI is 113.6 and the 2014 CPI is 236.7, how much would the house be worth in 2014 dollars?

A) $211,154
B) $206,279
C) $194,921
D) $181,356

Question 66

In early 2002, the inflation rate was about 1.4%. If you invested in a savings account with an annual interest rate of 4.8%, what was the real growth rate of this investment?

A) 1.66%
B) 3.35%
C) 4.27%
D) 6.12%

Question 67

A computer was purchased in 1999 for $3000. Its value in current dollars depreciates steadily at a rate of 25% per year. What will the computer's value be at the beginning of 2003?

A) $1920.05
B) $949.22
C) $652.28
D) $373.81

Question 68

Javier bought a house in 1974 for $49,000 and sold it in 2014. If the 1974 CPI is 49.3 and the 1997 CPI is 160.5, how much would the house be worth in 2014 dollars?

A) $235,260
B) $223,086
C) $195,157
D) $165,456

Question 69

Use the geometric series formula to find the sum of 1 - q + q² - q³ + q⁴.

A)
B)
C)
D)

Question 70

A car was purchased in 1980 for $12,000. Its value in current dollars depreciates steadily at a rate of 14% per year. What will the car's value be at the beginning of 2003?

A) $1920.05
B) $745.20
C) $628.52
D) $373.81

Question 71

A man makes $10 deposits each quarter into a savings account earning 8% interest compounded quarterly. He continues these deposits for 12 years. How much will the account be worth after 12 years?

A) $794
B) $827
C) $952
D) $1056

Question 72

Use the geometric series formula to find the sum of .

A)
B)
C)
D)

Question 73

John bought a house in 1947 for $19,000 and sold it in 1997. If the 1947 CPI is 22.3 and the 2014 CPI is 236.7, how much would the house be worth in 2014 dollars?

A) $182,640
B) $201,673
C) $238,501
D) $253,054

Question 74

If the rate of a 24-month CD is 1.15% compounded daily, how much would need to be set aside in such a CD to have $25,000 at the end of 24-month term?

A) $24,279.41
B) $24,431.57
C) $24,681.23
D) $24,750.34

Question 75

In late 2001 the inflation rate was about 2.9%. If you invested in a savings account with an annual interest rate of 9.2%, what was the real growth rate of this investment?

A) 1.66%
B) 3.35%
C) 4.27%
D) 6.12%

Question 76

Use the geometric series formula to find the sum of 1 - 2 + 4 - 8 + 16.

A)
B)
C)
D)

Question 77

A car was purchased in 1985 for $15,000. Its value in current dollars depreciates steadily at a rate of 13% per year. What will the car's value be at the beginning of 2003?

A) $1187.25
B) $1223.03
C) $1314.58
D) $1551.05

Question 78

The Chavez family has decided to save up for a new spa. They want to save $10,000 in five years. They find a savings account for which interest was compounded monthly at 8.2%. How much will they have to deposit each month to meet this goal?

A) $54
B) $97
C) $135
D) $256

Question 79

Use the geometric series formula to find the sum of [Hint: The series does not begin with 1.]

A)
B)
C)
D)

Question 80

Buck bought a house in 1967 for $19,000 and sold it in 2001. If the 1967 CPI is 33.4 and the 2014 CPI is 236.7, how much would the house be worth in 2014 dollars?

A) $155,157
B) $134,650
C) $103,921
D) $95,356