Question 1

Your portfolio of investments consists of a $10,000 loan due at the end of 5 years with interest at j1 = 10%,and a $25,000 loan due at the end of 10 years with interest at j12 = 6%.What is the present value of this portfolio at j2 = 8%? (Answer to nearest dollar)

Accepted Answer

A) $18,165 
B) $28,109 
C) $31,639 
D) $32,029

Question 2

If there will be 3 times as many fruit flies in a vegetable garden in 10 days as there are today,what rate of growth,compounded twice a day,does this represent?

Accepted Answer

A) 11.29% 
B) 11.61% 
C) 12.29% 
D) 23.22%

Question 3

You take out a loan of $25,000 from the ABC company.It is due in 5 years with interest at j2 = 6%.After 18 months,ABC sells your loan to the XYZ company at a price that will earn XYZ a rate of return of j4 = 5%.What price does XYZ pay?

Accepted Answer

A) $28,264.75 
B) $28,234.61 
C) $27,318.18 
D) $26,934.58

Question 4

How long does it take for a loan of $5000 to accumulate $1000 of interest if j2 = 10%?

Accepted Answer

A) 1 year,10 months,13 days 
B) 1 year,10 months,29 days 
C) 3 years,8 months,26 days 
D) 3 years,9 months,28 days

Question 5

Three payments of $10,000 are made at the end of 3,9 and 15 months respectively.Calculate the total accumulated value of these payments at the end of two years using the exact method with j6 = 6%.

Accepted Answer

A) $30,756.65 
B) $32,334.08 
C) $32,340.10 
D) $34,869.82

Question 6

Jim deposits $5000 in an account earning j12 = 9%.He leaves it there for 5 years.How much interest did he earn in the last year (that is,between years 4 and 5)?

Accepted Answer

A) $671.38 
B) $644.13 
C) $635.21 
D) $565.82

Question 7

You are investing a sum of money for 4 years.You earn a simple interest rate of r = 10% for the first 2 years and j12 = 6% for the last 2 years.What is the equivalent effective annual rate of return,j,you earn over each of the 4 years?

Accepted Answer

A) 8.81% 
B) 8.07%% 
C) 7.98% 
D) 7.84%

Question 8

You owe your parents $2500 today.You agree to pay this back by making a payment of $500 now,$600 six months from now and $X 18-months from now.What is X if j4 = 6%?

Accepted Answer

A) $1417.60 
B) $1473.22 
C) $1482.36 
D) $1550.07

Question 9

An investment doubles in 9 ½ years.What nominal rate of interest j4 is being earned?

Accepted Answer

A) 7.32% 
B) 7.36% 
C) 7.43% 
D) 7.57%

Question 10

You are investing a sum of money.Rank the following interest in order of which one will give you the most interest.
a. j2 = 8.00%
b. j12 = 7.95%
c. j52 = 7.90%

Accepted Answer

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

Question 11

You deposit $10 000 today in a fund that earns interest at j1 = 4.5%.However,at the end of every year,an expense charge of 0.50% of the accumulated amount of the fund is withdrawn.How much do you have at the end of 3-years?

Accepted Answer

A) $11,241.34 
B) $11,248.64 
C) $11,354.60 
D) $11,411.66

Question 12

A non-interest bearing long term promissory note is due on February 1,2011.The loan amount was $30,000.On October 15th,2010 the note was sold to a bank that charges interest at j12 = 12%.How much did the bank pay for this note? Assume the exact method is used for fractional time periods.

Accepted Answer

A) $28,959.25 
B) $28,973.20 
C) $28,977.85 
D) $29,104.21

Question 13

$25,000 was deposited into an investment account earning interest at a nominal rate of j2 = x% for 10 years.You are given that the corresponding total amount of interest earned in the first four years is $9,012.22.Determine x.

Accepted Answer

A) 6.25% 
B) 6.55% 
C) 7.85% 
D) 8.00%

Question 14

Mrs.Singh owes Mr.Valdy $55 513.78 in 14-months.Mr.Valdy agrees to let her repay the loan with a payment of $35 000 in 6-months,$10 000 in 10-months and $X in 14-months.If money is worth j4 = 6%,what is the value of X,using 14-months as the focal date along with the exact method of crediting/charging interest?

Accepted Answer

A) $8894.58 
B) $8895.72 
C) $8896.37 
D) $8897.69

Question 15

What is the accumulated value of $5000 for 20 months at j2 = 11% using the practical method?

Accepted Answer

A) $5978.85 
B) $5976.93 
C) $5957.00 
D) $5949.88

Question 16

You invest $50,000 today in a fund earning j4 = 12%.How much have you accumulated 65 months later using the practical method?

Accepted Answer

A) $81,038 
B) $93,945 
C) $94,866 
D) $94,875

Question 17

What is the equivalent effective annual rate,j,over 8-years that is equivalent to j6 = 8% for the first three years,j12 = 6% for the next three years,and j2 = 5% for the last two years?

Accepted Answer

A) 6.02% 
B) 6.13% 
C) 6.50% 
D) 6.67%

Question 18

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?

Accepted Answer

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

Question 19

A deposit of $100 is made into an account earning j12 = 18%.Another $100 is deposited into a 2nd account earning j2 = 10%.At what time,n (where n is in years),would the accumulated value of the first account be twice as much as the accumulated value in the 2nd account? (Answer in years)

Accepted Answer

A) 8.5 
B) 9.3 
C) 9.9 
D) 10.2

Question 20

An individual borrowed $10,000 nine months ago and another $6,000 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

Exam 2: Compound Interest

Your portfolio of investments consists of a $10,000 loan due at the end of 5 years with interest at j₁ = 10%,and a $25,000 loan due at the end of 10 years with interest at j₁₂ = 6%.What is the present value of this portfolio at j₂ = 8%? (Answer to nearest dollar)

If there will be 3 times as many fruit flies in a vegetable garden in 10 days as there are today,what rate of growth,compounded twice a day,does this represent?

You take out a loan of $25,000 from the ABC company.It is due in 5 years with interest at j₂ = 6%.After 18 months,ABC sells your loan to the XYZ company at a price that will earn XYZ a rate of return of j₄ = 5%.What price does XYZ pay?

How long does it take for a loan of $5000 to accumulate $1000 of interest if j₂ = 10%?

Three payments of $10,000 are made at the end of 3,9 and 15 months respectively.Calculate the total accumulated value of these payments at the end of two years using the exact method with j₆ = 6%.

Jim deposits $5000 in an account earning j₁₂ = 9%.He leaves it there for 5 years.How much interest did he earn in the last year (that is,between years 4 and 5) ?

You are investing a sum of money for 4 years.You earn a simple interest rate of r = 10% for the first 2 years and j₁₂ = 6% for the last 2 years.What is the equivalent effective annual rate of return,j,you earn over each of the 4 years?

You owe your parents $2500 today.You agree to pay this back by making a payment of $500 now,$600 six months from now and $X 18-months from now.What is X if j₄ = 6%?

An investment doubles in 9 ½ years.What nominal rate of interest j₄ is being earned?

You are investing a sum of money.Rank the following interest in order of which one will give you the most interest. a. j₂ = 8.00% b. j₁₂ = 7.95% c. j₅₂ = 7.90%

You deposit $10 000 today in a fund that earns interest at j₁ = 4.5%.However,at the end of every year,an expense charge of 0.50% of the accumulated amount of the fund is withdrawn.How much do you have at the end of 3-years?

A non-interest bearing long term promissory note is due on February 1,2011.The loan amount was $30,000.On October 15^th,2010 the note was sold to a bank that charges interest at j₁₂ = 12%.How much did the bank pay for this note? Assume the exact method is used for fractional time periods.

$25,000 was deposited into an investment account earning interest at a nominal rate of j₂ = x% for 10 years.You are given that the corresponding total amount of interest earned in the first four years is $9,012.22.Determine x.

What is the accumulated value of $5000 for 20 months at j₂ = 11% using the practical method?

You invest $50,000 today in a fund earning j₄ = 12%.How much have you accumulated 65 months later using the practical method?

What is the equivalent effective annual rate,j,over 8-years that is equivalent to j₆ = 8% for the first three years,j₁₂ = 6% for the next three years,and j₂ = 5% for the last two 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?

A deposit of $100 is made into an account earning j₁₂ = 18%.Another $100 is deposited into a 2^nd account earning j₂ = 10%.At what time,n (where n is in years) ,would the accumulated value of the first account be twice as much as the accumulated value in the 2^nd account? (Answer in years)

An individual borrowed $10,000 nine months ago and another $6,000 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.

Exam 2: Compound Interest

Your portfolio of investments consists of a $10,000 loan due at the end of 5 years with interest at j1 = 10%,and a $25,000 loan due at the end of 10 years with interest at j12 = 6%.What is the present value of this portfolio at j2 = 8%? (Answer to nearest dollar)

If there will be 3 times as many fruit flies in a vegetable garden in 10 days as there are today,what rate of growth,compounded twice a day,does this represent?

You take out a loan of $25,000 from the ABC company.It is due in 5 years with interest at j2 = 6%.After 18 months,ABC sells your loan to the XYZ company at a price that will earn XYZ a rate of return of j4 = 5%.What price does XYZ pay?

How long does it take for a loan of $5000 to accumulate $1000 of interest if j2 = 10%?

Three payments of $10,000 are made at the end of 3,9 and 15 months respectively.Calculate the total accumulated value of these payments at the end of two years using the exact method with j6 = 6%.

Jim deposits $5000 in an account earning j12 = 9%.He leaves it there for 5 years.How much interest did he earn in the last year (that is,between years 4 and 5) ?

You are investing a sum of money for 4 years.You earn a simple interest rate of r = 10% for the first 2 years and j12 = 6% for the last 2 years.What is the equivalent effective annual rate of return,j,you earn over each of the 4 years?

You owe your parents $2500 today.You agree to pay this back by making a payment of $500 now,$600 six months from now and $X 18-months from now.What is X if j4 = 6%?

An investment doubles in 9 ½ years.What nominal rate of interest j4 is being earned?

You are investing a sum of money.Rank the following interest in order of which one will give you the most interest. a. j2 = 8.00% b. j12 = 7.95% c. j52 = 7.90%

You deposit $10 000 today in a fund that earns interest at j1 = 4.5%.However,at the end of every year,an expense charge of 0.50% of the accumulated amount of the fund is withdrawn.How much do you have at the end of 3-years?

A non-interest bearing long term promissory note is due on February 1,2011.The loan amount was $30,000.On October 15th,2010 the note was sold to a bank that charges interest at j12 = 12%.How much did the bank pay for this note? Assume the exact method is used for fractional time periods.

$25,000 was deposited into an investment account earning interest at a nominal rate of j2 = x% for 10 years.You are given that the corresponding total amount of interest earned in the first four years is $9,012.22.Determine x.

What is the accumulated value of $5000 for 20 months at j2 = 11% using the practical method?

You invest $50,000 today in a fund earning j4 = 12%.How much have you accumulated 65 months later using the practical method?

What is the equivalent effective annual rate,j,over 8-years that is equivalent to j6 = 8% for the first three years,j12 = 6% for the next three years,and j2 = 5% for the last two 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?

A deposit of $100 is made into an account earning j12 = 18%.Another $100 is deposited into a 2nd account earning j2 = 10%.At what time,n (where n is in years) ,would the accumulated value of the first account be twice as much as the accumulated value in the 2nd account? (Answer in years)

An individual borrowed $10,000 nine months ago and another $6,000 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.

Your portfolio of investments consists of a $10,000 loan due at the end of 5 years with interest at j₁ = 10%,and a $25,000 loan due at the end of 10 years with interest at j₁₂ = 6%.What is the present value of this portfolio at j₂ = 8%? (Answer to nearest dollar)

You take out a loan of $25,000 from the ABC company.It is due in 5 years with interest at j₂ = 6%.After 18 months,ABC sells your loan to the XYZ company at a price that will earn XYZ a rate of return of j₄ = 5%.What price does XYZ pay?

How long does it take for a loan of $5000 to accumulate $1000 of interest if j₂ = 10%?

Three payments of $10,000 are made at the end of 3,9 and 15 months respectively.Calculate the total accumulated value of these payments at the end of two years using the exact method with j₆ = 6%.

Jim deposits $5000 in an account earning j₁₂ = 9%.He leaves it there for 5 years.How much interest did he earn in the last year (that is,between years 4 and 5) ?

You are investing a sum of money for 4 years.You earn a simple interest rate of r = 10% for the first 2 years and j₁₂ = 6% for the last 2 years.What is the equivalent effective annual rate of return,j,you earn over each of the 4 years?

You owe your parents $2500 today.You agree to pay this back by making a payment of $500 now,$600 six months from now and $X 18-months from now.What is X if j₄ = 6%?

An investment doubles in 9 ½ years.What nominal rate of interest j₄ is being earned?

You are investing a sum of money.Rank the following interest in order of which one will give you the most interest. a. j₂ = 8.00% b. j₁₂ = 7.95% c. j₅₂ = 7.90%

You deposit $10 000 today in a fund that earns interest at j₁ = 4.5%.However,at the end of every year,an expense charge of 0.50% of the accumulated amount of the fund is withdrawn.How much do you have at the end of 3-years?

A non-interest bearing long term promissory note is due on February 1,2011.The loan amount was $30,000.On October 15^th,2010 the note was sold to a bank that charges interest at j₁₂ = 12%.How much did the bank pay for this note? Assume the exact method is used for fractional time periods.

$25,000 was deposited into an investment account earning interest at a nominal rate of j₂ = x% for 10 years.You are given that the corresponding total amount of interest earned in the first four years is $9,012.22.Determine x.

What is the accumulated value of $5000 for 20 months at j₂ = 11% using the practical method?

You invest $50,000 today in a fund earning j₄ = 12%.How much have you accumulated 65 months later using the practical method?

What is the equivalent effective annual rate,j,over 8-years that is equivalent to j₆ = 8% for the first three years,j₁₂ = 6% for the next three years,and j₂ = 5% for the last two 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?

A deposit of $100 is made into an account earning j₁₂ = 18%.Another $100 is deposited into a 2^nd account earning j₂ = 10%.At what time,n (where n is in years) ,would the accumulated value of the first account be twice as much as the accumulated value in the 2^nd account? (Answer in years)

An individual borrowed $10,000 nine months ago and another $6,000 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.