Question 1

$4000 is deposited into an account earning j2 = 8% for the first 2 years and j2 = 10% thereafter.How long will it take for it to grow to $9041.67?

Accepted Answer

A) 6 yrs,9 months 
B) 8 yrs,9 months 
C) 13 yrs,6 months 
D) 17 yrs,6 months

Question 2

An investment has the following interest rates: j2 = 6% for the first 30 months,followed by j4 = 8% for the next 36 months,followed by j6 = 9% for the last 18 months.What is the equivalent j2 earned over the 7 year period?

Accepted Answer

A) 6.24% 
B) 6.68% 
C) 7.56% 
D) 7.70%

Question 3

You are investing a sum of money.Rank the following interest in order of which one will give you the most interest.
a. j2 = 8%
b. j52 = 7.9%
c. δ = j∞ = 7.85%

Accepted Answer

A) b > a > c 
B) a > c > b 
C) c > a > b 
D) b > c > a

Question 4

What simple interest rate,r,is equivalent to j12 = 9% over a 2-year period?

Accepted Answer

A) 9.82% 
B) 9.41% 
C) 9.38% 
D) 8.30%

Question 5

What is the value,in 18 months,of an investment of $10,000 made today if interest is compounded continuously at 6.5%?

Accepted Answer

A) $32,219.93 
B) $11,024.11 
C) $11,021.21 
D) $10,987.96

Question 6

You deposit $10,000 today in a fund earning interest at j× = 8%.How much will you have accumulated at the end of 21 months?

Accepted Answer

A) $11,502.74 
B) $11,497.40 
C) $11,441.73 
D) $10,832.87

Question 7

A single deposit of $25,000 is made into an account that earns interest at j4 = 7% for one year,j2 = 6% for the next year and j6 = 3% thereafter.How much interest is earned in the fourth year?

Accepted Answer

A) $143.93 
B) $863.58 
C) $889.82 
D) $916.85

Question 8

The 1996 Canada Savings Bond issue offered the following annual rates,guaranteed over 10 years: 3% in the first year,followed by 4%,5%,6%,6.50%,6.75%,7%,7,25%,8% and 8.75% in the 10th year.If you buy one of these bonds today and cash it in after 5 years,what annual rate of return do you earn?

Accepted Answer

A) 4.89% 
B) 5.39% 
C) 6.21% 
D) 6.50%

Question 9

A long-term promissory note for $40,000 is taken out on June 15,2010.The interest rate on the note is j4 = 7% and the note is due on December 15,2015.What is the maturity value of the note?

Accepted Answer

A) $58,589.15 
B) $58,398.79 
C) $58,597.50 
D) $57,581.47

Question 10

An individual borrowed $10 000 nine months ago and another $6000 three months ago and he wishes to pay off this loan with a payment of $X today.You are given that j2 = 10% and that the practical method of crediting/charging interest is used.Determine $X.

Accepted Answer

A) $16 918.90 
B) $16 912.50 
C) $16 907.46 
D) $16 900.26

Question 11

You invest a sum of money at j12 = 15% for 3 years,followed by j4 = 12% for 4 years.What equivalent rate of return,j1,do you earn over each of the 7 years?

Accepted Answer

A) 13.29% 
B) 13.50% 
C) 13.79% 
D) 14.05%

Question 12

Payments of $1000 due in 6 months,$1500 due in 9 months,and $1200 due in 15 months are to be exchanged for a single payment $X due in 12 months.What is X if j4 = 6%?

Accepted Answer

A) $3770.73 
B) $3734.99 
C) $3809.54 
D) $3927.05

Question 13

You shop around for the best interest rate and have narrowed your choices to the following:
Bank I: j1 = 12%
Bank II: j4 = 11.55%
Bank III: j12 = 11.30%
You wish to have $S in 3 years.What is the present value of S? Put the banks in order,from lowest to highest present value of S.

Accepted Answer

A) I < II < III 
B) III < II < I 
C) II < I < III 
D) III < I < II

Question 14

You borrow $2000 today.This loan is due in 3-years with interest at j1 = 9%.It is agreed that you will instead pay $1000 one-year from now and $X two-years from now.If money is worth j2 = 6%,what is the value of X?

Accepted Answer

A) $1190.12 
B) $1286.20 
C) $1380.48 
D) $1529.16

Question 15

A loan of $A is taken out today.You are given that this loan is to be paid off with a payment of $20,000 in 3 years and 8 months.Determine A,if j2 = 10% and the practical method of crediting/charging interest is used.

Accepted Answer

A) $13,988.01 
B) $13,984.33 
C) $13,980.62 
D) $13,762.40

Question 16

What simple interest rate r is equivalent to j12 = 9% if money is invested for 3.5 years?

Accepted Answer

A) 8.96% 
B) 9.83% 
C) 10.53% 
D) 11.27%

Question 17

An investment has the following interest rates: j4 = 8% for the first 2-years,followed by j2 = 8% for the next 4-years,followed by j12 = 6% for the last 28-months.What is the equivalent nominal rate of interest,compounded 3 times a year,j3,earned over this time period of 100 months?

Accepted Answer

A) 9.99% 
B) 7.43% 
C) 5.56% 
D) 11.31%

Question 18

The amount of clover on a lawn grows exponentially at a rate of j24(compounded twice a month)such that it doubles every 6-months.If there are 5000 pieces of clover in your lawn today,how many did you have 4-months ago? (Answer to the nearest piece of clover)

Accepted Answer

A) 1984 
B) 3150 
C) 3333 
D) 3969

Question 19

Jackie invested $500 in an investment fund that pays interest at j2 = 5.3% for the first two years,j12 = 7% for the next three years,and j365 = 4.5% for the last year.What effective interest rate,j,did she earn over the 6 years?

Accepted Answer

A) 6.17% 
B) 7.23% 
C) 6.78% 
D) 6.01%

Question 20

$P is deposited today in a fund which earns j12 = 6% for the 1st year,j4 = 6% for the 2nd year and j2 = 6% thereafter.At the end of 4 years,there is $12,000 in the fund.What is P?

Accepted Answer

A) $9461.84 
B) $9505.12 
C) $9747.82 
D) $10,038.06

Exam 2: Compound Interest

$4000 is deposited into an account earning j₂ = 8% for the first 2 years and j₂ = 10% thereafter.How long will it take for it to grow to $9041.67?

An investment has the following interest rates: j₂ = 6% for the first 30 months,followed by j₄ = 8% for the next 36 months,followed by j₆ = 9% for the last 18 months.What is the equivalent j₂ earned over the 7 year period?

You are investing a sum of money.Rank the following interest in order of which one will give you the most interest. a. j₂ = 8% b. j₅₂ = 7.9% c. δ = j_∞ = 7.85%

What simple interest rate,r,is equivalent to j₁₂ = 9% over a 2-year period?

What is the value,in 18 months,of an investment of $10,000 made today if interest is compounded continuously at 6.5%?

You deposit $10,000 today in a fund earning interest at j_× = 8%.How much will you have accumulated at the end of 21 months?

A single deposit of $25,000 is made into an account that earns interest at j₄ = 7% for one year,j₂ = 6% for the next year and j₆ = 3% thereafter.How much interest is earned in the fourth year?

The 1996 Canada Savings Bond issue offered the following annual rates,guaranteed over 10 years: 3% in the first year,followed by 4%,5%,6%,6.50%,6.75%,7%,7,25%,8% and 8.75% in the 10^th year.If you buy one of these bonds today and cash it in after 5 years,what annual rate of return do you earn?

A long-term promissory note for $40,000 is taken out on June 15,2010.The interest rate on the note is j₄ = 7% and the note is due on December 15,2015.What is the maturity value of the note?

An individual borrowed $10 000 nine months ago and another $6000 three months ago and he wishes to pay off this loan with a payment of $X today.You are given that j₂ = 10% and that the practical method of crediting/charging interest is used.Determine $X.

You invest a sum of money at j₁₂ = 15% for 3 years,followed by j₄ = 12% for 4 years.What equivalent rate of return,j₁,do you earn over each of the 7 years?

Payments of $1000 due in 6 months,$1500 due in 9 months,and $1200 due in 15 months are to be exchanged for a single payment $X due in 12 months.What is X if j₄= 6%?

You shop around for the best interest rate and have narrowed your choices to the following: Bank I: j₁ = 12% Bank II: j₄ = 11.55% Bank III: j₁₂ = 11.30% You wish to have $S in 3 years.What is the present value of S? Put the banks in order,from lowest to highest present value of S.

You borrow $2000 today.This loan is due in 3-years with interest at j₁ = 9%.It is agreed that you will instead pay $1000 one-year from now and $X two-years from now.If money is worth j₂ = 6%,what is the value of X?

A loan of $A is taken out today.You are given that this loan is to be paid off with a payment of $20,000 in 3 years and 8 months.Determine A,if j₂ = 10% and the practical method of crediting/charging interest is used.

What simple interest rate r is equivalent to j₁₂ = 9% if money is invested for 3.5 years?

An investment has the following interest rates: j₄ = 8% for the first 2-years,followed by j₂ = 8% for the next 4-years,followed by j₁₂ = 6% for the last 28-months.What is the equivalent nominal rate of interest,compounded 3 times a year,j₃,earned over this time period of 100 months?

The amount of clover on a lawn grows exponentially at a rate of j₂₄(compounded twice a month) such that it doubles every 6-months.If there are 5000 pieces of clover in your lawn today,how many did you have 4-months ago? (Answer to the nearest piece of clover)

Jackie invested $500 in an investment fund that pays interest at j₂ = 5.3% for the first two years,j₁₂ = 7% for the next three years,and j₃₆₅ = 4.5% for the last year.What effective interest rate,j,did she earn over the 6 years?

$P is deposited today in a fund which earns j₁₂ = 6% for the 1^st year,j₄ = 6% for the 2^nd year and j₂ = 6% thereafter.At the end of 4 years,there is $12,000 in the fund.What is P?

Exam 2: Compound Interest

$4000 is deposited into an account earning j2 = 8% for the first 2 years and j2 = 10% thereafter.How long will it take for it to grow to $9041.67?

An investment has the following interest rates: j2 = 6% for the first 30 months,followed by j4 = 8% for the next 36 months,followed by j6 = 9% for the last 18 months.What is the equivalent j2 earned over the 7 year period?

You are investing a sum of money.Rank the following interest in order of which one will give you the most interest. a. j2 = 8% b. j52 = 7.9% c. δ = j∞ = 7.85%

What simple interest rate,r,is equivalent to j12 = 9% over a 2-year period?

What is the value,in 18 months,of an investment of $10,000 made today if interest is compounded continuously at 6.5%?

You deposit $10,000 today in a fund earning interest at j× = 8%.How much will you have accumulated at the end of 21 months?

A single deposit of $25,000 is made into an account that earns interest at j4 = 7% for one year,j2 = 6% for the next year and j6 = 3% thereafter.How much interest is earned in the fourth year?

The 1996 Canada Savings Bond issue offered the following annual rates,guaranteed over 10 years: 3% in the first year,followed by 4%,5%,6%,6.50%,6.75%,7%,7,25%,8% and 8.75% in the 10th year.If you buy one of these bonds today and cash it in after 5 years,what annual rate of return do you earn?

A long-term promissory note for $40,000 is taken out on June 15,2010.The interest rate on the note is j4 = 7% and the note is due on December 15,2015.What is the maturity value of the note?

An individual borrowed $10 000 nine months ago and another $6000 three months ago and he wishes to pay off this loan with a payment of $X today.You are given that j2 = 10% and that the practical method of crediting/charging interest is used.Determine $X.

You invest a sum of money at j12 = 15% for 3 years,followed by j4 = 12% for 4 years.What equivalent rate of return,j1,do you earn over each of the 7 years?

Payments of $1000 due in 6 months,$1500 due in 9 months,and $1200 due in 15 months are to be exchanged for a single payment $X due in 12 months.What is X if j4 = 6%?

You shop around for the best interest rate and have narrowed your choices to the following: Bank I: j1 = 12% Bank II: j4 = 11.55% Bank III: j12 = 11.30% You wish to have $S in 3 years.What is the present value of S? Put the banks in order,from lowest to highest present value of S.

You borrow $2000 today.This loan is due in 3-years with interest at j1 = 9%.It is agreed that you will instead pay $1000 one-year from now and $X two-years from now.If money is worth j2 = 6%,what is the value of X?

A loan of $A is taken out today.You are given that this loan is to be paid off with a payment of $20,000 in 3 years and 8 months.Determine A,if j2 = 10% and the practical method of crediting/charging interest is used.

What simple interest rate r is equivalent to j12 = 9% if money is invested for 3.5 years?

An investment has the following interest rates: j4 = 8% for the first 2-years,followed by j2 = 8% for the next 4-years,followed by j12 = 6% for the last 28-months.What is the equivalent nominal rate of interest,compounded 3 times a year,j3,earned over this time period of 100 months?

The amount of clover on a lawn grows exponentially at a rate of j24(compounded twice a month) such that it doubles every 6-months.If there are 5000 pieces of clover in your lawn today,how many did you have 4-months ago? (Answer to the nearest piece of clover)

Jackie invested $500 in an investment fund that pays interest at j2 = 5.3% for the first two years,j12 = 7% for the next three years,and j365 = 4.5% for the last year.What effective interest rate,j,did she earn over the 6 years?

$P is deposited today in a fund which earns j12 = 6% for the 1st year,j4 = 6% for the 2nd year and j2 = 6% thereafter.At the end of 4 years,there is $12,000 in the fund.What is P?

$4000 is deposited into an account earning j₂ = 8% for the first 2 years and j₂ = 10% thereafter.How long will it take for it to grow to $9041.67?

An investment has the following interest rates: j₂ = 6% for the first 30 months,followed by j₄ = 8% for the next 36 months,followed by j₆ = 9% for the last 18 months.What is the equivalent j₂ earned over the 7 year period?

You are investing a sum of money.Rank the following interest in order of which one will give you the most interest. a. j₂ = 8% b. j₅₂ = 7.9% c. δ = j_∞ = 7.85%

What simple interest rate,r,is equivalent to j₁₂ = 9% over a 2-year period?

You deposit $10,000 today in a fund earning interest at j_× = 8%.How much will you have accumulated at the end of 21 months?

A single deposit of $25,000 is made into an account that earns interest at j₄ = 7% for one year,j₂ = 6% for the next year and j₆ = 3% thereafter.How much interest is earned in the fourth year?

The 1996 Canada Savings Bond issue offered the following annual rates,guaranteed over 10 years: 3% in the first year,followed by 4%,5%,6%,6.50%,6.75%,7%,7,25%,8% and 8.75% in the 10^th year.If you buy one of these bonds today and cash it in after 5 years,what annual rate of return do you earn?

A long-term promissory note for $40,000 is taken out on June 15,2010.The interest rate on the note is j₄ = 7% and the note is due on December 15,2015.What is the maturity value of the note?

An individual borrowed $10 000 nine months ago and another $6000 three months ago and he wishes to pay off this loan with a payment of $X today.You are given that j₂ = 10% and that the practical method of crediting/charging interest is used.Determine $X.

You invest a sum of money at j₁₂ = 15% for 3 years,followed by j₄ = 12% for 4 years.What equivalent rate of return,j₁,do you earn over each of the 7 years?

Payments of $1000 due in 6 months,$1500 due in 9 months,and $1200 due in 15 months are to be exchanged for a single payment $X due in 12 months.What is X if j₄= 6%?

You shop around for the best interest rate and have narrowed your choices to the following: Bank I: j₁ = 12% Bank II: j₄ = 11.55% Bank III: j₁₂ = 11.30% You wish to have $S in 3 years.What is the present value of S? Put the banks in order,from lowest to highest present value of S.

You borrow $2000 today.This loan is due in 3-years with interest at j₁ = 9%.It is agreed that you will instead pay $1000 one-year from now and $X two-years from now.If money is worth j₂ = 6%,what is the value of X?

A loan of $A is taken out today.You are given that this loan is to be paid off with a payment of $20,000 in 3 years and 8 months.Determine A,if j₂ = 10% and the practical method of crediting/charging interest is used.

What simple interest rate r is equivalent to j₁₂ = 9% if money is invested for 3.5 years?

An investment has the following interest rates: j₄ = 8% for the first 2-years,followed by j₂ = 8% for the next 4-years,followed by j₁₂ = 6% for the last 28-months.What is the equivalent nominal rate of interest,compounded 3 times a year,j₃,earned over this time period of 100 months?

The amount of clover on a lawn grows exponentially at a rate of j₂₄(compounded twice a month) such that it doubles every 6-months.If there are 5000 pieces of clover in your lawn today,how many did you have 4-months ago? (Answer to the nearest piece of clover)

Jackie invested $500 in an investment fund that pays interest at j₂ = 5.3% for the first two years,j₁₂ = 7% for the next three years,and j₃₆₅ = 4.5% for the last year.What effective interest rate,j,did she earn over the 6 years?

$P is deposited today in a fund which earns j₁₂ = 6% for the 1^st year,j₄ = 6% for the 2^nd year and j₂ = 6% thereafter.At the end of 4 years,there is $12,000 in the fund.What is P?