Question 1

Find effective rate (APY) and show work:

Accepted Answer

The answer of Find effective rate (APY) and show work:
...

Question 2

Anne Katz, the owner of Katz Sport Shop, lends $8,000 to Shelley Slater to help her open an art shop. Shelley plans to repay Anne at the end of eight years with interest compounded semiannually at 8%. At the end of eight years, Anne will receive (use the tables in the handbook):

Accepted Answer

A) $14,984 
B) $16,857 
C) $16,587 
D) $14,484 
E) None of these 
A) $14,984 
B) $16,857 
C) $16,587 
D) $14,484 
E) None of these

Question 3

The interest on $6,000 at 6% compounded semiannually for eight years is (use table in the handbook):

Accepted Answer

A) $3,628.20 
B) $3,682.02 
C) $362.82 
D) $13,628.20 
E) None of these 
A) $3,628.20 
B) $3,682.02 
C) $362.82 
D) $13,628.20 
E) None of these

Question 4

Ellen deposits $6,773 into an account earning 1% annually. After seven years what will Ellen's balance have grown to, including interest?

Accepted Answer

A) $7,516.68 
B) $7,516.88 
C) $7,261.33 
D) $6,836.78 
E) None of these 
A) $7,516.68 
B) $7,516.88 
C) $7,261.33 
D) $6,836.78 
E) None of these

Question 5

In tables for calculating compound interest, the number of periods is equal to:

Accepted Answer

A) Number of years divided by rate 
B) Number of years × rate 
C) Number of years × number of times compounded per year 
D) Number of years divided by number of times compounded per year 
E) None of these 
A) Number of years divided by rate 
B) Number of years × rate 
C) Number of years × number of times compounded per year 
D) Number of years divided by number of times compounded per year 
E) None of these

Question 6

A table factor of .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 7

Compounding interest daily is seldom used in comparison to compounding once a year.

Accepted Answer

A) True 
 B)False

Question 8

The number of periods in compounding is found by multiplying the number of years times the number of times compounded per year.

Accepted Answer

A) True 
 B)False

Question 9

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 10

The interest on $3,000 at 8% compounded semiannually for six years by using the table lookup (use table in handbook) is $1,803.

Accepted Answer

A) True 
 B)False

Question 11

Annual means compounded once a year.

Accepted Answer

A) True 
 B)False

Question 12

Using the interest for daily compounding (in your handbook), $700 would grow to $790 at the end of three years at 8% interest.

Accepted Answer

A) True 
 B)False

Question 13

The annual rate a bank advertises is the same as the effective rate.

Accepted Answer

A) True 
 B)False

Question 14

Using the table in the handbook, the table factor for compounding $4,000 at 9% compounded annually for one year is 1.0900.

Accepted Answer

A) True 
 B)False

Question 15

Al Miler, the owner of Al's Garage, estimates that he will need $29,000 for new equipment in 15 years. Al decides that he will put aside the money now so that in 15 years the $29,000 will be available. His bank offers him 10% interest compounded semiannually. (Use the tables in the handbook.) Al must invest today:

Accepted Answer

A) $6,710.60 
B) $6,942.60 
C) $6,701.60 
D) $125,335.10 
E) None of these 
A) $6,710.60 
B) $6,942.60 
C) $6,701.60 
D) $125,335.10 
E) None of these

Question 16

$20,000 for 14 years compounded at 8% semiannually results in how many periods?

Accepted Answer

A) 64 
B) 28 
C) 12 
D) 14 
E) None of these 
A) 64 
B) 28 
C) 12 
D) 14 
E) None of these

Find effective rate (APY) and show work:

Anne Katz, the owner of Katz Sport Shop, lends $8,000 to Shelley Slater to help her open an art shop. Shelley plans to repay Anne at the end of eight years with interest compounded semiannually at 8%. At the end of eight years, Anne will receive (use the tables in the handbook):

The interest on $6,000 at 6% compounded semiannually for eight years is (use table in the handbook):

Ellen deposits $6,773 into an account earning 1% annually. After seven years what will Ellen's balance have grown to, including interest?

In tables for calculating compound interest, the number of periods is equal to:

A table factor of .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.

Compounding interest daily is seldom used in comparison to compounding once a year.

The number of periods in compounding is found by multiplying the number of years times the number of times compounded per year.

The interest on $3,000 at 8% compounded semiannually for six years by using the table lookup (use table in handbook) is $1,803.

Annual means compounded once a year.

Using the interest for daily compounding (in your handbook), $700 would grow to $790 at the end of three years at 8% interest.

The annual rate a bank advertises is the same as the effective rate.

Using the table in the handbook, the table factor for compounding $4,000 at 9% compounded annually for one year is 1.0900.

$20,000 for 14 years compounded at 8% semiannually results in how many periods?

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Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

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Promissory Notes, Simple Discount Notes and the Discount Process

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Appreciation

Inventory and Overhead

Sales Excise and Property Taxes

Life, Fire and Auto Insurance

Stocks, Bonds and Mutual Funds

Business Statistics

Filters

Exam 12: Compound Interest and Present Value

Find effective rate (APY) and show work:

Anne Katz, the owner of Katz Sport Shop, lends $8,000 to Shelley Slater to help her open an art shop. Shelley plans to repay Anne at the end of eight years with interest compounded semiannually at 8%. At the end of eight years, Anne will receive (use the tables in the handbook):

The interest on $6,000 at 6% compounded semiannually for eight years is (use table in the handbook):

Ellen deposits $6,773 into an account earning 1% annually. After seven years what will Ellen's balance have grown to, including interest?

In tables for calculating compound interest, the number of periods is equal to:

A table factor of .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.

Compounding interest daily is seldom used in comparison to compounding once a year.

The number of periods in compounding is found by multiplying the number of years times the number of times compounded per year.

The interest on $3,000 at 8% compounded semiannually for six years by using the table lookup (use table in handbook) is $1,803.

Annual means compounded once a year.

Using the interest for daily compounding (in your handbook), $700 would grow to $790 at the end of three years at 8% interest.

The annual rate a bank advertises is the same as the effective rate.

Using the table in the handbook, the table factor for compounding $4,000 at 9% compounded annually for one year is 1.0900.

$20,000 for 14 years compounded at 8% semiannually results in how many periods?

Whole Number: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How to Approach to Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Promissory Notes, Simple Discount Notes and the Discount Process

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Appreciation

Inventory and Overhead

Sales Excise and Property Taxes

Life, Fire and Auto Insurance

Stocks, Bonds and Mutual Funds

Business Statistics

Filters