Financial Applications Question Preview (ID: 8043)


Chapter 7 - Financial Applications Review. TEACHERS: click here for quick copy question ID numbers.

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

Jasmine invests $400 at 8% annual interest, compounded annually. How much interest will be earned after 5 years?
a) $160
b) $187.73
c) $560
d) $587.73

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=3, i = 0.065
b) n= 6, i=0.0325
c) n=1.5, i=0.13
d) n=12, i=0.01625

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) $350.00
b) $355.98
c) $404.24
d) $421.36

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

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) Option A
b) Option B
c) Both Option A and B
d) None

You invest $1000 at 6% per year, compounded quarterly, for 3 years. What interest rate, compounded monthly, will give the same results?
a) 4.25%
b) 3.44%
c) 5.15%
d) 5.97%

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) $805.50; $145.76
b) $808.35; $151.81
c) $809.11; $153.71
d) $808.35; $149.83

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) $2987.03
b) $3110.47
c) $3115.83
d) $3101.19

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) 813 days
c) 817 days
d) 821 days

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