10.Interest paid (earned) on only the original principal borrowed (lent) is often referred to as __________.a.present valueb.simple interestc.future valued.compound intereste.None of the above.

11.Interest paid (earned) on both the original principal borrowed (lent) and previous interest earned is often referred to as __________.a.present valueb.simple interestc.future valued.compound interest

12.Which of the following investment alternatives would provide the greatest ending wealth for your investment?a.10% compounded daily (360 days).b.10.5% compounded annually.c.10.25% compounded quarterly.d.10.18432%compounded continuously. e.There is not sufficient information to determine the best alternative from the above information.

13.Which of the following will decrease the present value of the mixed cash flows for years 1 through 5 of $1,000; $4,000; $9,000; $5,000; and $2,000 respectively given a 10% discount rate?a.Decrease the discount rate by 2%.b.Switch cash flows for years 1 and 5 so that year 1 is $2,000 and year 5 is $1,000.c.Switch cash flows for years 2 and 4 so that year 2 is $5,000 and year 4 is $4,000.d.Switch cash flows for years 2 and 5 so that year 2 is $2,000 and year 5 is $4,000.

14.When comparing an annuity due with an ordinary annuity with the same payment and duration(andassuming positive interest rates), the annuity due will always have a _______ present value and will always have a _______ future value.a.higher; higherb.higher; lowerc.lower, higherd.lower, lowere.None of the combinations listed above is always correct.

15.You have just graduated and have decided to purchase a brand new sports car to enjoy your newfound freedom. Your local credit union will provide financing for 60 months at a 9 percent annual rate, compounded monthly. You will give 15 percent of the $26,000purchase price in cash to the dealer. The credit union will be used to finance the remaining 85 percent of the purchase price with the first payment due 1 month from today. What will be your monthly payment?a.$539.71b.$468.76c.$433.33d.$368.33e.None of the answers listed above are within $1 of the correctanswer.

16.You have just agreed to a new loan and have purchased a $3,000 computer today. The loan has a 19.6% annual interest rate, compounded monthly. The minimum monthly payment is $58,and you do not expect to ever pay more than the minimum payment. Assuming no additional charges or costs will occur with this loan, approximately what will you owe on the loan at the end of 3 years (36 months) when you expect to need another new computer?a.$2,676b.$2,564c.$2,304d.$2,088e.None of the answers listed above are within $1 of the correctanswer.

17.What is the present value of a $1,000 ordinary annuity that earns 8% annually for an infinite number of periods(that is, the $1000 occurs every year forever)?a.$80b.$800c.$1,000d.$15,000e.None of the answers listed above are within $1 of the correctanswer.

18.You want to have $1,000,000 when you retire in 30 years. You expect to earn 12% compounded monthly over the entire 30-year period. How much extra money per month must you deposit if you choose to fund using an ordinary annuity technique rather than an annuity due technique?a.$2.84b.$37.00c.$286.13d.$443.97e.None of the answers listed above are within $1 of the correctanswer.

19.You expect to deposit the following cash flows at the end of years 1 through 5, $1,000; $4,000; $9,000; $5,000; and $2,000 respectively. What is the future account value at the end of year 6 if you can earn 10% compounded annually?a.$15,633.62b.$21,000.00c.$25,178.10d.$27,695.91e.None of the answers listed above are within $1 of the correctanswer.

20.You won a contest at a local business that has paid you a single $5,000. At 22, you have decided to invest these funds for 45 years until you retire. During this time your account will earn 13%, compounded annually, every year. As soon as you retire (exactly 45 years from today) you will start withdrawing retirement funds every year for an additional 33 years, but you are investing more conservatively at 8% compounded annually. How much can you withdraw each year in retirement?a.$23,306b.$106,237c.$282,201d.$1,223,207e.None of the answers listed above are within $1 of the correctanswer

17. what is the present value of a $ 1,000 ordinary annuity that earns 8% annually for an infinite number of periods (that is, the $1000 occurs every year forever)? a. $80 b. $800 C. $1,000 d. $15,000 e. None of the answers listed above are within $1 of the correct answer. 18. You want to have $1,000,000 when you retire in 30 years. You expect to earn 12% compounded monthly over the entire 30-year period. How much extra money per month must you deposit if you choose to fund using an ordinary annuity technique rather than an annuity due technique? a. $2.84 b. $37.00 c. $286.13 d. $443.97 None of the answers listed above are within $1 of the correct answer. 19. You expect to deposit the following cash flows at the end of years 1 through 5, $1,000; $4,000; $9,000; $5,000; and $2,000 respectively. What is the future account value at the end of year 6 if you can earn 10% compounded annually? a. $15,633.62 b. $21,000.00 c. $25,178.10 d. $27,695.91 e. None of the answers listed above are within $1 of the correct answer. 20. You won a contest at a local business that has paid you a single $5,000. At 22, you have decided to invest these funds for 45 years until you retire. During this time your account will earn 13%, compounded annually, every year. As soon as you retire (exactly 45 years from today) you will start withdrawing retirement funds every year for an additional 33 years, but you are investing more conservatively at 8% compounded annually. How much can you withdraw each year in retirement? a. $23,306 b. $106,237 c. $282,201 d. $1,223,207 e. None of the answers listed above are within $1 of the correct