Question

8.You invest in your savings account $2365 today, $2000 at the end of year one and $3900 at the end of year three. If the interest rate is 6.1% per annum, compounded annually, then the amount you will have in exactly three years is closest to:

Select one:

a. $8976.17

b. $8754.34

c. $9214.07

d. $8846.73

9.Jack deposits the following amounts in a savings plan which pays 9.6% per annum, compounded monthly:

• $2853 today,
• $1400 at the end of year two and
• $2000 at the end of year three.

The amount he will have in exactly 3 years is closest to:

Select one:

a. $7495.90

b. $7290.47

c. $7341.33

d. $6994.73

11.Jack sells his lawn-mowing business for $50,000 but the buyer wants to pay for it in two cash payments: $25,000 in two months from today and the balance in 1 year from today. How much will Jack need to receive as the final payment (in 12 months) if the interest rate he charges is 6% per annum compounding monthly?

Select one:

A. $25,584.91

B. $25,248.14

C. $27,446.42

D. $26,805.39

13.You owe your parents $40,000 (in present day dollars) and want to repay them in equal amounts the first to occur in 4 years from today and the other in 6 years from today. If the interest rate is 4.8% per annum compounding monthly, what will be the amount of each repayment?

Select one:

A. $25,383.68

B. $21,000.00

C. $25,255.69

D. $24,956.22

15. An advertised investment product promises to pay $597 per month for 51 months commencing in 1 month from today. If the investment earns 8.0% p.a compounding monthly, how much will the investment product cost today? (round to nearest cent; don’t use $ sign or commas)

Select one:

a. $2248.42

b. $25739.01

c. $2081.87

d. $25910.60

17. A bank offers personal loans at 12.7%p.a compounding monthly. The effective annual rate of interest (EAR) is ( to the nearest two decimal places):

Select one:

a. 1.06%

b. 13.32%

c. 13.10%

d. 13.47%

Answer 1