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Financial Applications
Test Description: Chapter 7 - Financial Applications Review
Instructions: Answer all questions to get your test result.
1) Karl borrows $500 for 4 years at an annual simple interest rate of 12% per year. What is the amount that must be repaid?
A
$60
B
$240
C
$560
D
$740
2) Jasmine invests $400 at 8% annual interest, compounded annually. How much interest will be earned after 5 years?
A
$160
B
$560
C
$187.73
D
$587.73
3) If an amount is invested at 6.5% per year, compounded semi-annually, for 3 years, determine the number of compounding periods and the interest rate per compounding period.
A
n=1.5, i=0.13
B
n=3, i = 0.065
C
n=12, i=0.01625
D
n= 6, i=0.0325
4) An amount is deposited into an account that earns 9% per year, compounded quarterly. After 6 years, the amount in the account is $597.02. What is the present value?
A
$355.98
B
$421.36
C
$350.00
D
$404.24
5) Deanna invests $500 at 8% per year simple interest. She puts money in the bank on July 1 and takes it out on December 3. How much money does she take out?
A
$515.99
B
$506.99
C
$516.99
D
$517.99
6) Leon has $3000 that he wants to invest for 6 years. Which options should he choose? Option A: 5.2% annual interest, compounded quarterly OR Option B: 5% annual interest, compounded monthly.
A
Both Option A and B
B
Option B
C
Option A
D
None
7) You invest $1000 at 6% per year, compounded quarterly, for 3 years. What interest rate, compounded monthly, will give the same results?
A
3.44%
B
5.15%
C
4.25%
D
5.97%
8) An account paying 7.25% annual interest, compounded semi-annually, has a future value of $1429 in 8 years. What is the present value of the account? AND How much more interest will have been earned than if simple interest was paid?
A
$809.11; $153.71
B
$808.35; $151.81
C
$808.35; $149.83
D
$805.50; $145.76
9) To have $5000 at the end of 8 years, how much do you need to invest today, at 6% per annum, compounded semi-annually?
A
$3115.83
B
$2987.03
C
$3101.19
D
$3110.47
10) Jerry deposited $300 into an account that earns 6.7% annual interest, compounded daily. When he closed the account, the amount had grown to $348.56. How long was the money invested?
A
800 days
B
817 days
C
821 days
D
813 days
*select an answer for all questions
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