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Financial Applications
Test Description: Chapter 7 Financial Applications Review
Instructions: Answer all questions to get your test result.
1) Heather deposits $200 per week for 20 years into an account that earns 2.6% annual interest, compounded weekly. Find the amount of the annuity, and the amount of interest earned.
A
$271,789.92; $73, 523.29
B
$304, 879.28; $93,529.20
C
$311,942.21; $98,202.24
D
$272,723.63; $64,723.63
2) Niki needs $5200 for university tuition in 2 years. She makes deposits into an account that earns 6.5% per year, compounded bi-weekly. How much should she deposit every 2 weeks?
A
$93.77
B
$90.01
C
$92.47
D
$98.43
3) Suki wants to withdraw $800 per month for the next 20 years. The interest in her account is 6.25% per year, compounded monthly. How much must Suki deposit today to finance this?
A
$87,378.87
B
$98,999.23
C
$109,449.87
D
$103,594.29
4) The future value of a $200 deposit in an account that earns 6.25% annual interest is $272.71 after 5 years. Determine the compounding period for this investment.
A
weekly
B
semi-annually
C
quarterly
D
annually
5) Marko deposits $400 into an account at the end of every month for 8 years. Interest is earned at 5.5%, compounded monthly. Find the amount of both the annuity and interest earned.
A
$42,738.55; $8,345.28
B
$52,456.22; $10,200.23
C
$44,629.10; $8,789.92
D
$48,100.11; $9,700.11
6) Yuri deposits $850 into an account that earns 6.25% per year simple interest. How long will it take for the amount in this account to reach $1000?
A
2 years, 10 months
B
1 year, 9 months
C
2 years, 5 months
D
3 years, 2 months
7) An account with an initial value of $1000 earns 3% interest per year, compounded semi-annually. The shape of the graph of amount versus time is
A
cubic
B
linear
C
exponential
D
parabolic
8) Steve deposits $835 into an account that earns 8.25% per year, compounded annually. How much interest will have been earned after 5 years?
A
$401.11
B
$406.15
C
$415.67
D
$410.76
9) Five years ago, money was invested at 7% per year, compounded annually. Today the investment is worth $441.28. How much interest was earned on the original investment?
A
$126.65
B
$107.29
C
$153.39
D
$78.35
10) Wayne is 16 years old. To become a millionaire by the time he is 50 years old, how much does Wayne need to invest, semi-annually, at 4% per year compounded semi-annually?
A
$6203.56
B
$9801.67
C
$11,247.89
D
$7031.73
*select an answer for all questions
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