Solve by using compound table: \[\begin{array} { | l | l | l | l | l | } \hline \text { Principal } & \text { Rate } & \text { Time } & \begin{array} { l } \text { When } \\ \text { Compounded } \end{array} & \text { Total Amount } \\ \hline \$ 15,000 & 12 \% & \text { 4 years } & \text { Quarterly } & \text { ? } \\ \hline \end{array}\]

The answer of Solve by using compound table: \[\begin{array} {...

Exam 12: Compound Interest and Present Value

Trisha Long wants to buy a boat in five years. She estimates the boat will cost $15,000 at that time. What must Trisha deposit today in an account earning 5% annually to have enough to buy the boat in five years?

(Multiple Choice)

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Question 81

Solve by using compound table: Principal Rate Time When Compounded Total Amount \ 15,000 12\% 4 years Quarterly ?

(Short Answer)

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Question 82

Mia Kaminsky wants to attend Riverside Community College. She will need to have $25,000 six years from today. Mia is wondering what she will have to put in the bank today so that she will have $25,000 six years from now. Her bank pays 6% compounded semiannually. Using the tables in the handbook, the amount Mia will have to deposit is:

(Multiple Choice)

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Question 83

Use the present value table to complete: Future Amount Length of Rate Table Rate P.V. P.V. Desired Time Compounded Periods Used Factor Amount \ 12,000 12 yrs 12\% Semiannually A B C D

(Short Answer)

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Question 84

Jim Ryan deposited $8,000 at National Bank at 6% interest compounded quarterly. What was the effective rate (APY)? (Round to the nearest hundredth percent.)

(Short Answer)

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Question 85

Pete Sist wants to buy a new Chevrolet in five years. He estimates the car will cost $24,000. Assuming Pete invests $15,000 now at 10% interest compounded semiannually, will he have enough money to buy the car at the end of five years?

(Short Answer)

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Question 86

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

(True/False)

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Question 87

$100,000 for 20 years compounded at 4% annually results in a rate per period of:

(Multiple Choice)

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Question 88

Burton Bush wants to retire in Arizona when he is 80 years of age. Burton, who is now 55, believes he will need $500,000 to retire comfortably. To date, he has set aside no retirement money. If he gets an interest rate of 6% compounded annually, he will have to invest today (use the tables in the handbook):

(Multiple Choice)

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Question 89

The table for the compound value of $1 has only table factors over $1.00.

(True/False)

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Question 90

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

(Multiple Choice)

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Question 91

Al Derover wants to buy a used jeep in five years. He estimates the cost will be $13,000. If he invests $8,500 now at a rate of 10% compounded semiannually, will he have enough money to buy the jeep at the end of five years? Show your work.

(Short Answer)

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Question 92

Kelly Kuhn wants to purchase a new car for her son in five years. She estimates that the truck will cost $30,000 after all rebates. Assuming she invests at 8% compounded semiannually for five years, what must she invest today?

(Short Answer)

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Question 93

Effective rate (APY)is:

(Multiple Choice)

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Question 94

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

(Multiple Choice)

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Question 95

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

(True/False)

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Question 96

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

(True/False)

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Question 97

The effective rate (APY)can be calculated by the interest for one year divided by the principal.

(True/False)

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Question 98

Use the present value table to complete: Future Amount Length of Rate Table Rate P.V. P.V. Desired Time Compounded Periods Used Factor Amount \ 14,000 5 yrs 6\% quarterly A B C D

(Short Answer)

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Question 99

Compounding results in earning higher interest than simple interest.

(True/False)

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Question 100

Trisha Long wants to buy a boat in five years. She estimates the boat will cost $15,000 at that time. What must Trisha deposit today in an account earning 5% annually to have enough to buy the boat in five years?

Solve by using compound table: Principal Rate Time When Compounded Total Amount \ 15,000 12\% 4 years Quarterly ?

Use the present value table to complete: Future Amount Length of Rate Table Rate P.V. P.V. Desired Time Compounded Periods Used Factor Amount \ 12,000 12 yrs 12\% Semiannually A B C D

Jim Ryan deposited $8,000 at National Bank at 6% interest compounded quarterly. What was the effective rate (APY)? (Round to the nearest hundredth percent.)

Pete Sist wants to buy a new Chevrolet in five years. He estimates the car will cost $24,000. Assuming Pete invests $15,000 now at 10% interest compounded semiannually, will he have enough money to buy the car at the end of five years?

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

$100,000 for 20 years compounded at 4% annually results in a rate per period of:

The table for the compound value of $1 has only table factors over $1.00.

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

Al Derover wants to buy a used jeep in five years. He estimates the cost will be $13,000. If he invests $8,500 now at a rate of 10% compounded semiannually, will he have enough money to buy the jeep at the end of five years? Show your work.

Kelly Kuhn wants to purchase a new car for her son in five years. She estimates that the truck will cost $30,000 after all rebates. Assuming she invests at 8% compounded semiannually for five years, what must she invest today?

Effective rate (APY)is:

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

Compounding interest daily is seldom used in comparison to compounding 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 effective rate (APY)can be calculated by the interest for one year divided by the principal.

Use the present value table to complete: Future Amount Length of Rate Table Rate P.V. P.V. Desired Time Compounded Periods Used Factor Amount \ 14,000 5 yrs 6\% quarterly A B C D

Compounding results in earning higher interest than simple interest.

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