1. Nana Ekua opened a savings account this morning. Her money will earn 5 percent interest, compounded annually. After five years, her savings account will be worth GHS5,600. Assume she will not make any withdrawals. Given this, which one of the following statements is true? A. Nana Ekua deposited more than GHS5,600 this morning. B. The present value of Nana Ekua's account is GHS5,600. C. Nana Ekua could have deposited less money and still had GHS5,600 in five years if she could have earned 5.5 percent interest. D. Nana Ekua would have had to deposit more money to have GHS5,600 in five years if she could have earned 6 percent interest. E. Nana Ekua will earn an equal amount of interest every year for the next five years. 2. Peace invested GHS500 six years ago at 5 percent interest. She spends her earnings as soon as she earns any interest so she only receives interest on her initial GHS500 investment. Which type of interest is Peace earning? A. free interest B. complex interest C. simple interest D. interest on interest E. compound interest

3. Edusei invested GHS100 two years ago at 10 percent interest. The first year, he earned GHS10 interest on his GHS100 investment. He reinvested the GHS10. The second year, he earned GHS11 interest on his GHS110 investment. The extra GHS1 he earned in interest the second year is referred to as: A. free interest. B. bonus income. C. simple interest. D. interest on interest. E. present value interest. 4. David just computed the present value of a GHS10,000 bonus he will receive in the future. The interest rate he used in this process is referred to as which one of the following? A. current yield B. effective rate C. compound rate D. simple rate E. discount rate

5. The process of determining the present value of future cash flows in order to know their worth today is called which one of the following? A. compound interest valuation B. interest on interest computation C. discounted cash flow valuation D. present value interest factoring E. complex factoring