Question

1. A deposit of $4,375 earns 5.45 percent the first year, 5.86 percent the second year, 6.52 percent the third year, 7.08 percent in the fourth year and 7.54 percent in the fifth year. What is the amount of the fifth year future value?
A. less than $5,915
B. more than $5,915 but less than $5,950
C. more than $5,950 but less than $5,985
D. more than $5,985 but less than $6,020
E. more than $6,020

2. How much would be in your savings account in 18 years after depositing $1,475 today if the bank pays 5.76 percent interest per year and compounds annually?
A. less than $3,920
B. more than $3,920 but less than $3,955
C. more than $3,955 but less than $3,990
D. more than $3,990 but less than $4,025
E. more than $4,025

3. You can invest $7,500 for 12 years in an account that earns 5.76 percent per year or you can choose an account that has a delayed start for two years. That is, you wait two years and put $7,500 into an account that earns 6.84 percent per year. Assume that both accounts compound monthly. If you select the investment earning 5.76 percent, how much more interest will you earn than the account that pays 6.84 percent per year?
A. less than $115
B. more than $115 but less than $140
C. more than $140 but less than $175
D. more than $175 but less than $210
E. more than $210

4. Caroline wants to retire in 20 years and she has $167,895 in her retirement account today. Her Uncle James and Aunt Mary have established a trust fund for her that will pay $125,000 to her in 20 years. Caroline wants the sum of the trust and her retirement account to equal $725,000 upon retirement. If the accounts compound interest annually, what annual rate will Caroline need to earn on the retirement account to achieve this goal?
A. less than 6.00
B. more than 6.00 percent but less than 6.35 percent
C. more than 6.35 percent but less than 6.70 percent
D. more than 6.70 percent but less than 7.05 percent
E. more than 7.05 percent

Answer 1

Answer:1 - Option D more than $ 6020

Answer:2- Option E more than $ 4025

Answer:3- Option A less than $ 115 (Because Interest in Option is $ 7446 and Option 2 is $ 7334 i.e. difference is $ 112)

Answer:4- Option D more than 6.70% but less than 7.05% because @7% amount is greater than $ 6,00,000 and @6.70% amount is Less than $ 6,00,000. (Total AMount $ 7,25,000 but trust will pay $ 125000 that means $ 600000 required from Retirement account)