Question 1

Match the following terms with their definitions.
-Nominal rate

Accepted Answer

A) Year times number of times compounded in one year 
B) Twice a year 
C) Stated rate 
D) True rate of interest 
E) Amount calculated on adjusted principal
F)Periodically interest is calculated and added to principal
G)Rate divided by number of times compounded per year
H)Know future amount looking for present
I)Four times per year
J)Twelve times per year 
A) Year times number of times compounded in one year 
B) Twice a year 
C) Stated rate 
D) True rate of interest 
E) Amount calculated on adjusted principal
F)Periodically interest is calculated and added to principal
G)Rate divided by number of times compounded per year
H)Know future amount looking for present
I)Four times per year
J)Twelve times per year

Question 2

The nominal rate is really the true rate.

Accepted Answer

A) True 
 B)False

Question 3

Solve by using compound table:
 $$\begin{array} { | l | l | l | l | l | l | l | } 
\hline \text { Principal } & \text { Time } & \begin{array} { l } 
\text { Rate of } \
\text { Compound }
\end{array} & \begin{array} { l } 
\text { When } \
\text { Compounded }
\end{array} & \begin{array} { l } 
\text { \# of Periods to be } \
\text { Compounded }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { Amount }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { Interest }
\end{array} \
\hline \$ 300 & 1 \text { year } & 16 \% & \text { Quarterly } & \text { A } & \text { B } & \text { C } \
\hline
\end{array}$$

Accepted Answer

A. 4; B. $

Question 4

Solve by using compound table:
 $$\begin{array} { | l | l | l | l | l | l | l | } 
\hline \text { Principal } & \text { Time } & \begin{array} { l } 
\text { Rate of } \
\text { Compound }
\end{array} & \begin{array} { l } 
\text { When } \
\text { Compounded }
\end{array} & \begin{array} { l } 
\text { \# of Periods to be } \
\text { Compounded }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { Amount }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { Interest }
\end{array} \
\hline \$ 1,500 & 1 \text { year } & 12 \% & \text { Quarterly } & \text { A } & \text { B } & \text { C } \
\hline
\end{array}$$

Accepted Answer

A. 4; B. $

Question 5

Jim Moore opens a new savings account. He deposits $12,000 at 12% compounded semiannually. At the start of the fourth year, Jim deposits an additional $50,000 that is also compounded semiannually at 12%. At the end of six years, the balance in Jim Moore's account is (use the tables in the handbook):

Accepted Answer

A) $66,081.20 
B) $50,000.00 
C) $16,081.20 
D) $88,555.42 
E) None of these 
A) $66,081.20 
B) $50,000.00 
C) $16,081.20 
D) $88,555.42 
E) None of these

Question 6

John James lent Mel Karras $8,000 to open a pottery shop. Mel will repay John at the end of five years with interest, compounded quarterly, at 8%. How much will John receive at the end of five years?

Accepted Answer

8% / 4 = 2%, 5 × 4 =

Question 7

Gracie Shay wants to buy a new Hummer in six years. Gracie estimates the cost of the Hummer will be $35,000. If she invests $22,000 now at a rate of 6% compounded quarterly, she:

Accepted Answer

A) Will have enough money 
B) Will have exactly $32,000 
C) Will have $33,450 
D) Will have $31,449 
E) None of these 
A) Will have enough money 
B) Will have exactly $32,000 
C) Will have $33,450 
D) Will have $31,449 
E) None of these

Question 8

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 9

Match the following terms with their definitions.
-Effective rate (APY)

Accepted Answer

A) Year times number of times compounded in one year 
B) Twice a year 
C) Stated rate 
D) True rate of interest 
E) Amount calculated on adjusted principal
F)Periodically interest is calculated and added to principal
G)Rate divided by number of times compounded per year
H)Know future amount looking for present
I)Four times per year
J)Twelve times per year 
A) Year times number of times compounded in one year 
B) Twice a year 
C) Stated rate 
D) True rate of interest 
E) Amount calculated on adjusted principal
F)Periodically interest is calculated and added to principal
G)Rate divided by number of times compounded per year
H)Know future amount looking for present
I)Four times per year
J)Twelve times per year

Question 10

Use the present value table to complete:
 $$\begin{array} { | l | l | l | l | l | l | l | } 
\hline\text { Future } & & & & & \ 
\text { Amount } & \text { Length of } & \text { Rate } & \text { Table } & \text { Rate } & \text { P.V. } & \text { P.V. } \
\text { Desired } & \text { Time } & \text { Compounded } & \text { Periods } & \text { Used } & \text { Factor } & \text { Amount } \
\hline \$ 24,000 & 6 \text { yrs } & 8 \% \text { quarterly } & \text { A } & \text { B } & \text { C } & \text { D } \
\hline
\end{array}$$

Accepted Answer

A. 24; B.

Question 11

Kathy Crag, the owner of The Fabric Corner, lent $15,000 to Dani Flynn to open her own card shop. Dani plans to repay Kathy at the end of 7 years with 8% interest compounded quarterly. How much will Kathy receive at the end of 12 years?

Accepted Answer

8% / 4 = 2%; 7 × 4 =

Question 12

Sam Monte deposits $21,500 into Legal Bank, which pays 6% interest that is compounded semiannually. Using the table in the handbook, what will Sam have in his account at the end of six years?

Accepted Answer

A) $29,760.30 
B) $30,654.70 
C) $30,456.07 
D) $29,670.03 
E) None of these 
A) $29,760.30 
B) $30,654.70 
C) $30,456.07 
D) $29,670.03 
E) None of these

Match the following terms with their definitions. -Nominal rate

The nominal rate is really the true rate.

Solve by using compound table: Principal Time Rate of Compound When Compounded \# of Periods to be Compounded Total Amount Total Interest \ 300 1 year 16\% Quarterly A B C

Solve by using compound table: Principal Time Rate of Compound When Compounded \# of Periods to be Compounded Total Amount Total Interest \ 1,500 1 year 12\% Quarterly A B C

Jim Moore opens a new savings account. He deposits $12,000 at 12% compounded semiannually. At the start of the fourth year, Jim deposits an additional $50,000 that is also compounded semiannually at 12%. At the end of six years, the balance in Jim Moore's account is (use the tables in the handbook):

John James lent Mel Karras $8,000 to open a pottery shop. Mel will repay John at the end of five years with interest, compounded quarterly, at 8%. How much will John receive at the end of five years?

Gracie Shay wants to buy a new Hummer in six years. Gracie estimates the cost of the Hummer will be $35,000. If she invests $22,000 now at a rate of 6% compounded quarterly, she:

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

Match the following terms with their definitions. -Effective rate (APY)

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 \ 24,000 6 yrs 8\% quarterly A B C D

Kathy Crag, the owner of The Fabric Corner, lent $15,000 to Dani Flynn to open her own card shop. Dani plans to repay Kathy at the end of 7 years with 8% interest compounded quarterly. How much will Kathy receive at the end of 12 years?

Sam Monte deposits $21,500 into Legal Bank, which pays 6% interest that is compounded semiannually. Using the table in the handbook, what will Sam have in his account at the end of six years?

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for 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

Depreciation

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

Match the following terms with their definitions. -Nominal rate

The nominal rate is really the true rate.

Solve by using compound table: Principal Time Rate of Compound When Compounded \# of Periods to be Compounded Total Amount Total Interest \ 300 1 year 16\% Quarterly A B C

Solve by using compound table: Principal Time Rate of Compound When Compounded \# of Periods to be Compounded Total Amount Total Interest \ 1,500 1 year 12\% Quarterly A B C

John James lent Mel Karras $8,000 to open a pottery shop. Mel will repay John at the end of five years with interest, compounded quarterly, at 8%. How much will John receive at the end of five years?

Gracie Shay wants to buy a new Hummer in six years. Gracie estimates the cost of the Hummer will be $35,000. If she invests $22,000 now at a rate of 6% compounded quarterly, she:

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

Match the following terms with their definitions. -Effective rate (APY)

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 \ 24,000 6 yrs 8\% quarterly A B C D

Kathy Crag, the owner of The Fabric Corner, lent $15,000 to Dani Flynn to open her own card shop. Dani plans to repay Kathy at the end of 7 years with 8% interest compounded quarterly. How much will Kathy receive at the end of 12 years?

Sam Monte deposits $21,500 into Legal Bank, which pays 6% interest that is compounded semiannually. Using the table in the handbook, what will Sam have in his account at the end of six years?

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for 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

Depreciation

Inventory and Overhead

Sales, Excise, and Property Taxes

Life, Fire, and Auto Insurance

Stocks, Bonds, and Mutual Funds

Business Statistics

Filters