Question 1

A twenty-year note for $1000.00 bearing interest at 9% compounded monthly is discounted at 5% compounded quarterly four years and six months before maturity. Find the proceeds of the note.

Accepted Answer

A)  $6009.15
B)  $4805.10
C)  $133.07
D)  $4800.65
E)  $4741.93 B

Question 2

Meridian Credit Union expects an average annual growth rate of 3% for the next four years. If the assets of the credit union currently amount to $11.4 billion, what will the forecasted assets be in four years?

Accepted Answer

A)  $12.83 billion
B)  $1.43 billion
C)  $12.85 billion
D)  $1.45 billion
E)  $32.56 billion A

Question 3

A debt of $4000 due today is to be settled by two equal payments due three months from now, and 9 months from now respectively. What is the size of the equal payments at 8% compounded quarterly?

Accepted Answer

Let the size of the two equal payments be $x and the focal date be now.
4000.00 = x(1.02)-1 + x(1.02)-3
4000.00 = .9803921569x + .9423223345x
4000.00 = 1.922714491x
$2080.39 = x

Question 4

You will need three amounts of $14 200 in each year for four years in order to go to school. You are planning on going to school starting in 5 years and ending in 8 years (years 5, 6, 7, 8). You are able to earn 9.64% compounded quarterly. How much money do you have to have today in order to be able to go to school?

Accepted Answer

A)  $30 574.35
B)  $30 457.35
C)  $30 754.35
D)  $30 475.34
E)  $33 354.35

Question 5

A debt of $8125 due today is to be settled by three equal payments due three months from now, 18 months from now, and 39 months from now respectively. What is the size of the equal payments at 6.8% compounded quarterly?

Accepted Answer

The answer of A debt of $8125 due today is...

Question 6

You invest $6780 in a floating rate guaranteed investment certificate. For the first 30 months you earn 4.9% compounded semi-annually. For the next 8 months you earn 4.32% compounded monthly. What is the maturity value of the certificate?

Accepted Answer

A)  $7775.44
B)  $7785.44
C)  $7857.44
D)  $7875.44
E)  $7888.44

Question 7

Find the maturity value of a promissory note for $1400.00 dated March 31, 2001, and due on August 31, 2006, if interest is 7.64% compounded quarterly.

Accepted Answer

The answer of Find the maturity value of a promissory...

Question 8

A $8000.00 investment matures in five years, three months. Find the maturity value if interest is 12% p.a. compounded quarterly.

Accepted Answer

The answer of A $8000.00 investment matures in five years,...

Question 9

What is the present value of $7800.00 payable in six years if the current interest rate is 7.6% p.a., compounded quarterly?

Accepted Answer

The answer of What is the present value of $7800.00...

Question 10

An investment of $2500.00 accumulates interest at 9.25% compounded quarterly. After 18 months the rate changed to 9.75% compounded semi-annually. Calculate the accumulated value three years after the initial investment.

Accepted Answer

The answer of An investment of $2500.00 accumulates interest at...

Question 11

Debts of $400.00, $450.00 and $500.00 are due in one year, eighteen months and thirty months from now respectively. Determine the single payment now that would settle the debts if interest is 8% p.a. compounded quarterly.

Accepted Answer

The answer of Debts of $400.00, $450.00 and $500.00 are...

Question 12

You want to retire with $400 000 in the bank and you are able to earn 6% compounded quarterly for the next 25 years. How much money do you have to invest today in order to achieve your goal?

Accepted Answer

A)  $90 251.78
B)  $90 251.77
C)  $90 001.78
D)  $90 201.77
E)  $90 001.77

Question 13

What is the discounted value of $9900.00 due in five years, seven months if money is worth 2.2% compounded quarterly.

Accepted Answer

A)  $9031
B)  $9118
C)  $6855
D)  $6876
E)  $8757

Question 14

A $4300.00 promissory note issued without interest for nine years on September 30, 2001, is discounted on July 31, 2006, at 8.32% compounded quarterly. Find the compound discount.

Accepted Answer

The answer of A $4300.00 promissory note issued without interest...

Question 15

Two years after Sean deposited $5000 in a savings account that earned interest at 6% compounded monthly, the rate of interest was changed to 6.4% compounded semi-annually. How much was in the account fifteen years after the deposit was made?

Accepted Answer

The answer of Two years after Sean deposited $5000 in...

Question 16

Orange Credit Union expects an average annual growth rate of 16% for the next four years. If the assets of the credit union currently amount to $2.7 million, what will the forecasted assets be in four years?

Accepted Answer

The answer of Orange Credit Union expects an average annual...

Question 17

Alternative Savings offers five-year term deposits at 10% compounded annually while your credit union offers such deposits at 9.6% compounded quarterly. If you have $1000 to invest, what is the maturity value of your deposit
a)at Alternative Savings?
b)at your credit union?

Accepted Answer

The answer of Alternative Savings offers five-year term deposits at...

Question 18

A 9-month non-interest bearing promissory note is sold 2 months after it was issued. The face value of the note is $8500 and it is discounted at a rate of 5.2% compounded annually. What are the proceeds?

Accepted Answer

A)  $8252.33
B)  $8525.33
C)  $8255.33
D)  $8522.33
E)  $8552.33

Question 19

Find m for the investment of $1000.00 for 2 years at 1.8% compounded semi-annually.

Accepted Answer

A)  4
B)  2
C)  0.9%
D)  1
E)  1.8%

Question 20

Two payments of $49 000 each must be made 3 year and 5 year from now. If money can earn 4.9% compounded monthly, what single payment 5 years from now would be equivalent to the two scheduled payments?

Accepted Answer

A)  $98 117
B)  $98 000
C)  $103 034
D)  $105 742
E)  $101 177

Exam 9: Compound Interest - Future Value and Present Value