Question

________ 16.   According to the Rule of 72, it will take _____ years to double your money at a 6.4 percent rate of interest.

                         a. 11.25 years b. 11.33 years                         c. 11.67 years                   d. 12.00 years

________ 17.   Your current annual salary is $97,400. Your first job paid $22,500. How many years have you been

                         employed if your average annual salary increase has been 4.2 percent?

                         a. 26.87 years b. 31.15 years                         c. 32.01 years                   d. 35.62 years

________ 18.   Which one of the following statements is correct, all else held constant?

                         a.    The future value will decrease if the interest rate is increased.

                         b. The present value is directly related to the interest rate.

                         c. An increase in the interest rate will increase the time period.

                         d. The future value and the present value are directly related.

________ 19.   Ten years ago, Zenia had a population of 4.6 million residents. Today, there are 6.3 million residents of

                         Zenia. What is the annual rate of population growth?

                         a. 2.68 percent               b. 2.94 percent                        c. 3.19 percent                  d. 4.27 percent

________ 20.   A farmer currently produces 45,000 bushels of corn a year. He can increase his harvest by an average rate of

                         3 percent annually. How long will it be until the farmer can produce 50,000 bushels of corn each year?

                         a. 3.07 years b. 3.56 years                           c. 3.80 years                     d. 4.14 years

Answer 1

Hi

Answer 16- 11.25 years

According to the Rule of 72,

Hence, in our case,

Doubling Time = 72 / 6.4 = 11.25 Years

Answer 17 - 35.62 years

97400 = 22500 * ( 1 + 4.2%) ^ n

97400 / 22500 = ( 1 + 4.2%) ^ n

4.328889 = (1.042)^n

Using Log,

Answer - 18

The present value is directly related to the interest rate.

The future value and the present value are directly related.

Answer 19 - 3.19%

This can be calculated using the Compounded Annual Growth Rate (CAGR) formula -

CAGR = (End value / Start Value) ^ ( 1 / n) - 1

Answer 20 - 3.56 years

Similar to question 17

50000 = 45000 * ( 1 + 3%) ^ n

50000 / 45000 = ( 1 + 3%) ^ n

1.1111 = (1.03)^n

Using Log,

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