Deck 13: Personal Financial Management

Question 1

Solve the problem. Assume that simple interest is being calculated in each case. Round the answer to the nearest cent
unless otherwise indicated.
John Lee's savings account has a balance of $4610. After 21 months, what will the amount of interest be at 4.3% per year?

A)$219.24
B)$198.23
C)$346.90
D)$219.52

Answer 1

C

Question 2

Find the future value of the deposit if the account pays simple interest.
$1800 at 3% for 5 years

A)$2070
B)$2065
C)$2124
D)$1942

Answer 2

A

Question 3

Use the compound interest formula to compute the future value of the investment.
$9000 at 8% compounded semiannually for 8 years

A)$14,760.00
B)$12,317.12
C)$16,658.37
D)$16,856.83

Answer 3

D

Question 4

Find the future value of the deposit if the account pays simple interest.
$1450 at 4% for 2.1 years

A)$1514.11
B)$1566.00
C)$1629.80
D)$1571.80

Question 5

Use the compound interest formula to compute the future value of the investment.
$1300 at 2% compounded quarterly for 6 years

A)$1339.49
B)$1465.31
C)$1456.00
D)$1464.01

Question 6

Use the compound interest formula to compute the future value of the investment.
$19,000 at 1% compounded annually for 13 years

A)$21,623.77
B)$21,280.00
C)$21,409.68
D)$21,470.00

Question 7

$4000 at 4.07% for 28 months

A)$4558.40
B)$37,986.67
C)$379.87
D)$5.81

Question 8

Solve the problem. Assume that simple interest is being calculated in each case. Round the answer to the nearest cent
unless otherwise indicated.
Martin takes out a simple interest loan at 4 %. After 10 months the amount of interest on the loan is $80.93. What was the amount of the loan? Round to the nearest dollar.

A)$2428
B)$2768
C)$24
D)$2389

Question 9

Solve the problem. Assume that simple interest is being calculated in each case. Round the answer to the nearest cent
unless otherwise indicated.
John forgot to pay his $408.00 income tax on time. The IRS charged a penalty of 5% for the 74 days the money was late. Find the penalty that was paid. (Use a 365 day year.)

A)$4.14
B)$0.34
C)$4.08
D)$412.14

Question 10

Solve the problem. Assume that simple interest is being calculated in each case. Round the answer to the nearest cent
unless otherwise indicated.
Andy Jones opened a security service company. To pay for startup costs, Andy Jones borrowed $40,000 from a bank at 5% for 1 year. Find the interest.

A)$2000.00
B)$42,000.00
C)$2400.00
D)$200.00

Question 11

$1660 at 6% for 4 months

A)$398.40
B)$33.20
C)$24.90
D)$3320.00

Question 12

$900 at 3% for 1 year

A)$27
B)$270
C)$3.00
D)$2.70

Question 13

Question 14

$2950 at 4% for 1 years

A)$118.00
B)$11,800.00
C)$11.80
D)$737.50

Question 15

Question 16

Find the future value of the deposit if the account pays simple interest.
$760 at 4% for 9 months

A)$782.99
B)$780.27
C)$785.33
D)$782.80

Question 17

Solve the problem. Assume that simple interest is being calculated in each case. Round the answer to the nearest cent
unless otherwise indicated.
Allan borrowed $3900 from his father to buy a car. He repaid him after 9 months with interest of 7% per year. Find the total amount he repaid.

A)$4104.75
B)$4173.00
C)$4082.00
D)$204.75

Question 18

$800 at 8% for 8 years

A)$800.00
B)$512.00
C)$51.20
D)$12.50

Question 19

Solve the problem. Assume that simple interest is being calculated in each case. Round the answer to the nearest cent
unless otherwise indicated.
Annie's cafe borrows $5900 at 7% for 60 days. Find the total amount that must be repaid after 60 days. (Use a 365 day year.)

A)$5906.79
B)$6313.00
C)$5967.89
D)$6578.90

Question 20

Find the future value of the deposit if the account pays simple interest.
$2000 at 2.4% for 4 years

A)$2192.00
B)$2187.20
C)$2240.00
D)$2101.05

Question 21

Use the compound interest formula to compute the future value of the investment.
$700 at 6.5% compounded daily for 11 years (assume 360 days per year)

A)$1399.41
B)$852.28
C)$1430.84
D)$701.39

Question 22

Find the compound interest earned by the deposit. Round to the nearest cent.

Question 23

Find the compound interest earned by the deposit. Round to the nearest cent.
$2000 at 1% compounded semiannually for 8 years

A)$165.71
B)$160.00
C)$166.14
D)$81.41

Question 24

Find the present value for the given future amount. Round to the nearest cent.
A = $12,400, 3 years r = 4% compounded annually

A)$11,023.55
B)$1376.45
C)$13,948.31
D)$11,464.50

Question 25

Use the compound interest formula to compute the future value of the investment.
$1100 at 1% compounded monthly for 12 months

A)$1100.92
B)$1239.51
C)$1111.05
D)$1111.00

Question 26

Use the compound interest formula to compute the future value of the investment.
$1620 at 7.4% compounded annually for 16 years

A)$3418.20
B)$4726.93
C)$3538.08
D)$5076.72

Question 27

Find the present value for the given future amount. Round to the nearest cent.
A = $37,000, 10 years r = 8% compounded semiannually

A)$17,138.16
B)$20,113.68
C)$81,071.56
D)$16,886.32

Question 28

Use the compound interest formula to compute the future value of the investment.
$3250 at 5.5% compounded daily for 15 years (assume 360 days per year)

A)$3257.46
B)$4079.97
C)$7255.55
D)$7415.65

Question 29

Find the compound interest earned by the deposit. Round to the nearest cent.
$1320 at 1.6% compounded annually for 6 years

A)$131.90
B)$105.60
C)$109.03
D)$126.72

Question 30

Find the compound interest earned by the deposit. Round to the nearest cent.
$4100 at 2.9% compounded semiannually for 5 years

A)$634.83
B)$594.50
C)$306.00
D)$630.00

Question 31

Use the compound interest formula to compute the future value of the investment.
$5000 at 6.5% compounded monthly for 4 years

A)$28,244.37
B)$5184.08
C)$5109.22
D)$6480.10

Question 32

Use the compound interest formula to compute the future value of the investment.
$5000 at 7.25% compounded continuously for 7 years

A)$10,323.66
B)$5375.96
C)$8305.67
D)$3759.51

Question 33

Find the present value for the given future amount. Round to the nearest cent.
A = $4200, 9 years r = 8% compounded annually

A)$8395.82
B)$2269.13
C)$2098.95
D)$2101.05

Question 34

Find the compound interest earned by the deposit. Round to the nearest cent.
$3000 compounded continuously at 3.3% for 20 months. (Assume 608 days.)Round the answer to the nearest dollar.

A)$170
B)$-116
C)$167
D)$168

Question 35

Use the compound interest formula to compute the future value of the investment.
$800 at 6.3% compounded semiannually for 12 years

A)$1665.29
B)$1684.04
C)$1404.80
D)$1160.70

Question 36

Use the compound interest formula to compute the future value of the investment.
$5500 at 8% compounded monthly for 7 years

A)$7688.66
B)$9610.82
C)$196,473.48
D)$5761.86

Question 37

Find the compound interest earned by the deposit. Round to the nearest cent.
$300 at 3% compounded quarterly for 3 years

A)$27.00
B)$28.14
C)$306.80
D)$27.82

Question 38

Find the compound interest earned by the deposit. Round to the nearest cent.
$3000 at 2% compounded annually for 10 years

A)$600.00
B)$585.28
C)$656.98
D)$540.00

Question 39

Find the present value for the given future amount. Round to the nearest cent.
A = $4000, 12 years r = 4% compounded semiannually

A)$2486.89
B)$2498.39
C)$1513.11
D)$6433.75

Question 40

Find the compound interest earned by the deposit. Round to the nearest cent.
$7824 at 4% compounded continuously for 4 years

A)$2122.03
B)$3389.90
C)$1357.55
D)$9181.55

Question 41

Find the effective annual interest rate for the given nominal annual interest rate. Round your answers to the nearest
0.01%.
5% compounded semiannually

A)5.12%
B)5.00%
C)5.09%
D)5.06%

Question 42

Find the effective annual interest rate for the given nominal annual interest rate. Round your answers to the nearest
0.01%.
4.1% compounded hourly (assume 365 days per year)

A)4.18%
B)4.24%
C)4.19%
D)104.19%

Question 43

Find the effective annual interest rate for the given nominal annual interest rate. Round your answers to the nearest
0.01%.
3.9% compounded every minute (assume 365 days per year)

A)3.98%
B)103.98%
C)3.97%
D)4.03%

Question 44

Solve the problem.
Joe is buying some kitchen equipment for his new apartment. The total cost is $3400 and he places a down payment of $340. There is add-on interest of 9%. What is the total amount to be repaid if he
Takes 5 years to pay for the purchase?

A)$3335.40
B)$140,760.00
C)$4437.00
D)None of the above is correct.

Question 45

Solve the problem.
You just put $1650 in a CD that is expected to earn 9% compounded quarterly, and $30,000 in a savings account that is expected to earn 4% compounded semiannually. Determine when, to the
Nearest year, the values of your two investments will be the same.

A)76 years
B)41 years
C)23 years
D)59 years

Question 46

Solve the problem.
Joe is buying some kitchen equipment for his new apartment. The total cost is $3700 and he places a down payment of $370. There is add-on interest of 9%. Find the total interest Joe will pay if it takes
Him 3 year(s)to pay for his purchase?

A)$89,910.00
B)$899.10
C)$299.70
D)None of the above is correct.

Question 47

Solve the problem.
The average cost of a 4-year college education is projected to be $120,000 in 15 years. How much money should be invested now at 7.5%, compounded quarterly, to provide $120,000 in 15 years?

A)$39,366.24
B)$12,914.17
C)$90,816.95
D)$120,000.00

Question 48

Solve the problem.
Use the rule of 70 to estimate the annual inflation rate (to the nearest tenth of a percent)that would cause the general level of prices to double in 28 years.

A)2.4%
B)2.5%
C)2.9%
D)2.3%

Question 49

Find the present value for the given future amount. Round to the nearest cent.
A = $4900, 8 years r = 8% compounded quarterly

A)$2647.32
B)$2299.90
C)$2600.10
D)$9234.25

Question 50

Solve the problem.
You have money in an account at 4% interest, compounded monthly. To the nearest year, how long will it take for your money to double?

A)24 years
B)14 years
C)10 years
D)17 years

Question 51

Solve the problem.
The 2006 price of a certain type of car is $24,700. Estimate the price of the same car in the year 2020. Assume a constant annual inflation rate of 2.2%. Give a number of significant figures consistent
With the 2006 price given.

A)$34,837.17
B)$33,497.28
C)$32,307.60
D)$32,157.39

Question 52

Solve the problem.
$8791 is deposited into a savings account at 8% interest, compounded annually. To the nearest year, how long will it take for the account balance to reach $1,000,000?

A)62 years
B)55 years
C)43 years
D)86 years

Question 53

Find the effective annual interest rate for the given nominal annual interest rate. Round your answers to the nearest
0.01%.
3% compounded quarterly

A)3.04%
B)3.02%
C)3.00%
D)3.03%

Question 54

Solve the problem.
Use the rule of 70 to estimate the years to double for an annual inflation rate of 6%.

A)9 years
B)13 years
C)12 years
D)14 years

Question 55

Solve the problem.
Joe is buying some kitchen equipment for his new apartment. The total cost is $2300 and he places a down payment of $230. There is add-on interest of 12%. What is the total amount he will be
Financing?

A)$2070.00
B)$2990.00
C)$2300.00
D)None of the above is correct.

Question 56

Find the effective annual interest rate for the given nominal annual interest rate. Round your answers to the nearest
0.01%.
4.7% compounded monthly

A)0.39%
B)0.05%
C)4.80%
D)104.80%

Question 57

Solve the problem.
Use the inflation proportion to estimate the 2005 price of a jacket which costs $470 in 2000. Assume that the price increased at the average annual rate shown in the table below. Round your answer to
The nearest dollar.

Question 58

Solve the problem.
Ellen invests her money in a savings account which compounds interest quarterly and which gives an effective annual yield of 4.18%. What is the nominal rate?

A)4.12%
B)4.14%
C)4.25%
D)4.09%

Question 59

Solve the problem.
Miguel invests his money in a savings account which gives an effective annual yield of 3.5%. The nominal rate is 3.45%. How often does compounding occur - daily, monthly, quarterly, or
Semiannually?

A)quarterly
B)monthly
C)semiannually
D)daily

Question 60

Find the effective annual interest rate for the given nominal annual interest rate. Round your answers to the nearest
0.01%.
4.3% compounded daily (assume 365 days per year)

A)104.39%
B)0.01%
C)0.04%
D)4.39%

Question 61

Solve the problem.
The unpaid balance in an account on May 1 was $221. A purchase of $27 was made on May 8. A $80 payment was made on May 22. The finance charge rate was 1.25% per month of the average
Daily balance. Find the new balance at the end of May.

A)$170.70
B)$222.23
C)$169.25
D)$142.19

Question 62

Solve the problem.
Tony and Barb decide to buy new living room furniture worth $6000. They make a down payment of $600. Barb decides they should pay off what they owe in 30 monthly payments. Find the amount
Of the monthly payment at 8% add-on interest.

A)$540.00
B)$3780.00
C)$6480.00
D)$216.00

Question 63

On April 1, the unpaid balance in an account was $218. A payment of $30 was made on April 11. On April 21, a $40 purchase was made. The finance charge rate was 1.15% per month of the
Average daily balance. Find the new balance at the end of April.

A)$190.28
B)$220.28
C)$229.15
D)$230.43

Question 64

On the July 5 billing date, David had a balance due of $1027.85 on his credit card. The transactions during the following month were: The interest rate on the card is 1.3% per month. Using the average daily balance method, find the
Finance charge on August 5 (July has 31 days).

A)$12.37
B)$12.41
C)$12.52
D)$11.89

Question 65

Solve the problem.
Charlie cannot remember how much he financed to buy his car. He does remember that his monthly payment is $500. His add-on interest rate was 9% and he made a total of 36 payments.
Find the amount of his loan to the nearest penny.

A)$14,173.23
B)$4864.86
C)$4245.28
D)None of the above is correct.

Question 66

Solve the problem. Round to the nearest cent.
On January 1, the unpaid balance in an account was $195. A payment of $50 was made on January 25. The finance charge rate was 1.2% per month of the average daily balance. Find the finance
Charge for the month of January.

A)$1.74
B)$4.08
C)$2.34
D)$2.20

Question 67

Find the finance charge on the open-end charge account. Assume interest is calculated on the unpaid balance of the
account.
Unpaid Balance Monthly Interest Rate

Question 68

Solve the problem. Round to the nearest cent.
The unpaid balance in an account on December 1 was $174. A payment of $45 was made on December 18. The finance charge rate was 1.2% per month of the average daily balance. Find the
Finance charge for the month of December.

A)$1.84
B)$3.64
C)$1.55
D)$1.74

Question 69

Solve the problem.

Question 70

Solve the problem.
The March 1 unpaid balance in an account was $150. On March 10, a payment of $20 was made.No new purchases were made in March. The finance charge rate was 1.3% per month of the average
Daily balance. Find the new balance at the end of March.

A)$131.30
B)$131.71
C)$131.77
D)$147.65

Question 71

Solve the problem.
Barb is buying a new car for $13,000. Her old car has a trade-in Value of $2500. The dealer informs her that the financing charge is 7% add-on interest. If she wishes to take 2 years to pay off the car,
What will be the total amount to be repaid?

A)$11,235.00
B)$14,820.00
C)$11,970.00
D)$157,500.00

Question 72

How many monthly payments of $139.44 are necessary to pay off a $4000 loan if the add-on interest rate is 8.5%?

A)40 payments
B)30 payments
C)36 payments
D)None of the above is correct.

Question 73

Find the finance charge on the open-end charge account. Assume interest is calculated on the unpaid balance of the
account.

Question 74

Solve the problem. Round to the nearest cent.
On October 1, the unpaid balance in an account was $114. No payments were made that month. The finance charge rate was 1.4% per month of the average daily balance. Find the finance charge
For the month of October.

A)$1.74
B)$1.60
C)$1.50
D)$1.46

Question 75

Find the finance charge on the open-end charge account. Assume interest is calculated on the unpaid balance of the
account.
Unpaid Balance Monthly Interest Rate

Question 76

Solve the problem.
The unpaid balance in an account at the beginning of December was $222. A payment of $70 was made on December 20. No new purchases were made in December. The finance charge rate was
1.1% per month of the average daily balance. Find the new balance at the end of December.

A)$173.44
B)$153.10
C)$154.09
D)$154.14

Question 77

Solve the problem. Round to the nearest cent.
On September 1, the unpaid balance in an account was $188. On September 3, a payment of $60 was made. The finance charge rate was 1.0% per month of the average daily balance. Find the
Finance charge for the month of September.

A)$1.32
B)$3.16
C)$1.34
D)$1.28

Question 78

Solve the problem.
Bill makes a $167.33 per month payment for 3 years to pay off a $4000 loan. What was the add-on interest rate?

A)10.3%
B)8.5%
C)16.9%
D)None of the above is correct.

Question 79

Solve the problem. Round to the nearest cent.
The unpaid balance in an account on November 1 was $124. A payment of $50 was made on November 12. The finance charge rate was 1.2% per month of the average daily balance. Find the
Finance charge for the month of November.

A)$1.13
B)$0.89
C)$2.38
D)$1.11

Question 80

Solve the problem.
How many monthly payments of $100 are necessary to pay off a $2500 loan if the add-on interest rate is 8%?

A)36 payments
B)28 payments
C)30 payments
D)40 payments