Question 1

Tonya put $250 into an account three years ago.The first year he earned 6 percent interest,the second year 7 percent,and the third year 8 percent.About how about much does Tonya have in her account now?
A) $302.50
B) $306.23
C) $308.67
D) $309.39

Accepted Answer

The answer of Tonya put $250 into an account three...

Question 2

The price of a bond is equal to the sum of the present values of its future payments.Suppose a certain bond pays $50 one year from today and $1,050 two years from today.What is the price of the bond if the interest rate is 5 percent?
A) $1,050.00
B) $1,045.35
C) $1,000.00
D) $945.35

Accepted Answer

The answer of The price of a bond is equal...

Question 3

George has $300 in a bank account.Some years ago he put $213.20 into this account,and it has earned 5 percent interest every year since then.How many years ago did he open his account?
A) 4 years
B) 5 years
C) 6 years
D) 7 years

Accepted Answer

The answer of George has $300 in a bank account.Some...

Question 4

You are given three options.You may have the balance in an account that has been collecting 5 percent interest for 20 years,the balance in an account that has been collecting 10 percent interest for 10 years,or the balance in an account that has been collecting 20 percent interest for five years.Each account had the same original balance.Which account now has the lowest balance?
A) the first one
B) the second one
C) the third one
D) They all have the same balance.

Accepted Answer

The account that has been collecting 20 percent interest for five years will have the lowest balance because although the interest rate is higher, the time period for which the account has been collecting interest is much shorter compared to the other two options. This means that the compounding effect of interest is not as significant as in the other two options. Additionally, the higher interest rate also means that there could be higher risk or volatility associated with the account, which could lead to potential losses. Therefore, it is likely that the balance in this account will be the lowest of the three options.

Question 5

Two years ago Brian put some money into an account.He earned 6 percent interest on this account and now has about $1,000.About how much did he deposit into his account two years ago?
A) about $860
B) about $870
C) about $880
D) about $890

Accepted Answer

The answer of Two years ago Brian put some money...

Question 6

Imagine that two years ago you inherited $20,000 and put it into an account paying a fixed 8 percent annual interest rate.How much money do you have in your account now?
A) $22,880.00
B) $23,200.00
C) $23,232.00
D) $23,328.00

Accepted Answer

The answer of Imagine that two years ago you inherited...

Question 7

Robert put $15,000 into an account with a fixed interest rate two years ago and now the account balance is $16,695.38.What rate of interest did Robert earn?
A) 4.5 percent
B) 5.5 percent
C) 6.5 percent
D) 8.0 percent

Accepted Answer

Using the formula for compound interest, we can solve for the interest rate:
$15,000(1 + r)^2 = $16,695.38
Simplifying:
(1 + r)^2 = 1.113025
1 + r = √1.113025
1 + r = 1.055
r = 0.055 = 5.5%
Therefore, the interest rate is 5.5%, which corresponds to choice B.

Question 8

Four years ago Lenny deposited some money into an account.He earned 5 percent interest on this account and now it has a balance of $303.88.About how much money did Lenny deposit into his account when he opened it?
A) $210
B) $220
C) $240
D) $250

Accepted Answer

The answer of Four years ago Lenny deposited some money...

Question 9

Jorge deposited $1,000 into an account three years ago.The first two years he earned 5 percent interest;the third year he earned 6 percent interest.How much money does Jorge have in his account today?
A) $1,157.90
B) $1,168.65
C) $1,176.00
D) None of the above are correct to the nearest cent.

Accepted Answer

After the first year, Jorge has $1,000 + 0.05*$1,000 = $1,050. 
After the second year, Jorge has $1,050 + 0.05*$1,050 = $1,102.50. 
After the third year, Jorge has $1,102.50 + 0.06*$1,102.50 = $1,168.65.

Question 10

Your accountant tells you that if you can continue to earn the current interest rate on your balance of $800 for the next two years you will have $898.88 in your account.If your accountant is correct what is the current interest rate?
A) 6 percent
B) 7 percent
C) 8 percent
D) 9 percent

Accepted Answer

The answer of Your accountant tells you that if you...

Question 11

Anna deposited $10,000 into an account three years ago.The first year she earned 12 percent interest,the second year she earned 8 percent interest,and the third year she earned 4 percent interest.How much money does she have in her account today?
A) $12,579.84
B) $12,596.80
C) $12,597.12
D) None of the above are correct to the nearest cent.

Accepted Answer

The answer of Anna deposited $10,000 into an account three...

Question 12

Your accountant tells you that if you can continue to earn the current interest rate on your balance of $750 for the next three years,you will have $998.25 in your account.If your accountant is correct,what is the current interest rate?
A) 9 percent
B) 10 percent
C) 11 percent
D) 12 percent

Accepted Answer

We can use the formula for compound interest:

A = P(1 + r/n)^(nt)

where:
A = the amount after t years
P = the principal (starting balance)
r = the annual interest rate (unknown)
n = the number of times the interest is compounded per year (assuming once a year)
t = the number of years

Plugging in the given values, we have:

998.25 = 750(1 + r/1)^(1*3)

Simplifying:

1.331 = 1 + 3r

3r = 0.331

r = 0.1103 or 11.03%

Therefore, the current interest rate is 11 percent (Choice C). However, this is not one of the answer choices given. The closest answer is B, which is 10 percent. This is a reasonable estimate since the actual rate is only slightly higher than 10 percent.

Question 13

When he was 18,Gerald put $100 into an account at an interest rate of 8 percent.He now has $171.38 in this account.For how many years did Gerald leave this money in his account?
A) 5 years
B) 6 years
C) 7 years
D) 8 years

Accepted Answer

Using the formula A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the interest rate, t is the time in years, and n is the number of times interest is compounded per year, we can solve for t:

171.38 = 100(1 + 0.08/1)^(1*t)

Taking the natural logarithm of both sides:

ln(171.38) = ln(100) + ln(1.08)^t

ln(171.38/100) = t*ln(1.08)

t = ln(171.38/100) / ln(1.08)

t ≈ 6.963, which rounds up to 7. Therefore, Gerald left the money in the account for 7 years.

Question 14

On May 25,1978 three pals graduated from high school,pooled together $1,000 and put the money into an account promising to pay 8% for the next 30 years.On May 25,2008 they withdrew all the money from the account.To the nearest dollar,how much did they withdraw?
A) $2,400
B) $10,063
C) $32,400
D) None of the above are correct to the nearest dollar.

Accepted Answer

The future value of the investment can be calculated using the formula for compound interest: FV = P(1 + r)^n, where P is the principal amount ($1,000), r is the annual interest rate (0.08), and n is the number of years (30). Plugging in the values, FV = 1000(1 + 0.08)^30 = 1000(10.063). Therefore, they withdrew approximately $10,063.

Question 15

Brittany wants to have about $500,000 when she retires in 10 years.She has $200,000 to deposit now.At which of the following interest rates would her deposit come closest to $500,000 after 10 years?
A) 9.6 percent
B) 9.8 percent
C) 10 percent
D) 10.2 percent

Accepted Answer

The answer of Brittany wants to have about $500,000 when...

Question 16

Your accountant tells you that if you can continue to earn the current interest rate on your balance of $500 for ten years,you will have about $983.58.If your accountant is correct,what is the current rate of interest?
A) 5 percent
B) 6 percent
C) 7 percent
D) 8 percent

Accepted Answer

To find the current rate of interest, we can use the formula:
Future Value = Present Value x (1 + Rate)^Time
where Future Value is $983.58, Present Value is $500, Time is 10 years.
Rearranging the formula, we get:
Rate = (Future Value / Present Value)^(1/Time) - 1
Substituting the values, we get:
Rate = ($983.58 / $500)^(1/10) - 1
Rate = 0.07 or 7%
Therefore, the current rate of interest is 7%.

Question 17

The price of a bond is equal to the sum of the present value of its future payments.Suppose a certain bond pays $50 one year from today,and $1,050 two years from today.What is the price of this bond if the interest rate is 5 percent?
A) $1,000
B) $1,050
C) $1,100
D) None of the above is correct.

Accepted Answer

The price of the bond is calculated by discounting each future payment to its present value using the interest rate. The present value of $50 received one year from today is $50 / (1 + 0.05) = $47.62. The present value of $1,050 received two years from today is $1,050 / (1 + 0.05)^2 = $952.38. Adding these gives $47.62 + $952.38 = $1,000.

Question 18

Your financial advisor tells you that if you earn the historical rate of return on a certain mutual fund,then in three years your $20,000 will grow to $23,152.50.What rate of interest does your financial advisor expect you to earn?
A) 5 percent
B) 6 percent
C) 7 percent
D) 8 percent

Accepted Answer

The answer of Your financial advisor tells you that if...

Question 19

Veronica deposited $1,000 into an account two years ago.The first year she earned 7 percent interest;the second year she earned 5 percent.How much money does Veronica have in her account today?
A) $1,133.31
B) $1,120.00
C) $1,123.50
D) None of the above are correct to the nearest cent.

Accepted Answer

The answer of Veronica deposited $1,000 into an account two...

Question 20

Felix deposited $500 into an account two years ago.The first year he earned 3 percent interest and the second year he earned 5 percent interest.How much money does Felix have in his account now?
A) $540.75
B) $540.80
C) $540.85
D) None of the above are correct to the nearest cent.

Accepted Answer

The answer of Felix deposited $500 into an account two...

Quiz 27: The Basic Tools of Finance

Tonya put $250 into an account three years ago.The first year he earned 6 percent interest,the second year 7 percent,and the third year 8 percent.About how about much does Tonya have in her account now?

The price of a bond is equal to the sum of the present values of its future payments.Suppose a certain bond pays $50 one year from today and $1,050 two years from today.What is the price of the bond if the interest rate is 5 percent?

George has $300 in a bank account.Some years ago he put $213.20 into this account,and it has earned 5 percent interest every year since then.How many years ago did he open his account?

Two years ago Brian put some money into an account.He earned 6 percent interest on this account and now has about $1,000.About how much did he deposit into his account two years ago?

Imagine that two years ago you inherited $20,000 and put it into an account paying a fixed 8 percent annual interest rate.How much money do you have in your account now?

Robert put $15,000 into an account with a fixed interest rate two years ago and now the account balance is $16,695.38.What rate of interest did Robert earn?

Four years ago Lenny deposited some money into an account.He earned 5 percent interest on this account and now it has a balance of $303.88.About how much money did Lenny deposit into his account when he opened it?

Jorge deposited $1,000 into an account three years ago.The first two years he earned 5 percent interest;the third year he earned 6 percent interest.How much money does Jorge have in his account today?

Your accountant tells you that if you can continue to earn the current interest rate on your balance of $800 for the next two years you will have $898.88 in your account.If your accountant is correct what is the current interest rate?

Anna deposited $10,000 into an account three years ago.The first year she earned 12 percent interest,the second year she earned 8 percent interest,and the third year she earned 4 percent interest.How much money does she have in her account today?

Your accountant tells you that if you can continue to earn the current interest rate on your balance of $750 for the next three years,you will have $998.25 in your account.If your accountant is correct,what is the current interest rate?

When he was 18,Gerald put $100 into an account at an interest rate of 8 percent.He now has $171.38 in this account.For how many years did Gerald leave this money in his account?

On May 25,1978 three pals graduated from high school,pooled together $1,000 and put the money into an account promising to pay 8% for the next 30 years.On May 25,2008 they withdrew all the money from the account.To the nearest dollar,how much did they withdraw?

Brittany wants to have about $500,000 when she retires in 10 years.She has $200,000 to deposit now.At which of the following interest rates would her deposit come closest to $500,000 after 10 years?

Your accountant tells you that if you can continue to earn the current interest rate on your balance of $500 for ten years,you will have about $983.58.If your accountant is correct,what is the current rate of interest?

The price of a bond is equal to the sum of the present value of its future payments.Suppose a certain bond pays $50 one year from today,and $1,050 two years from today.What is the price of this bond if the interest rate is 5 percent?

Your financial advisor tells you that if you earn the historical rate of return on a certain mutual fund,then in three years your $20,000 will grow to $23,152.50.What rate of interest does your financial advisor expect you to earn?

Veronica deposited $1,000 into an account two years ago.The first year she earned 7 percent interest;the second year she earned 5 percent.How much money does Veronica have in her account today?

Felix deposited $500 into an account two years ago.The first year he earned 3 percent interest and the second year he earned 5 percent interest.How much money does Felix have in his account now?