Question
22) Suppose that you want to create a college fund for your newborn child and place $300 in a bank account at the end of
22) Suppose that you want to create a "college fund" for your newborn child and place $300 in a bank account at the end of each of the next 20 years. If that account earns an annual rate of return of 7%, how much will be in that account at the end of the twentieth year? A) $13,420.00 B) $12,977.53 C) $13,178.20 D) $11,828.32 E) $12,298.65 23) Your great-uncle placed $500 a year in a bank account for your "college fund" for each of the last 18 years. How much is now in your college account (at the end of the eighteenth year) if your account earned an annual rate of return of 6%? A) $15,452.83 B) $15,175.17 C) $16,427.17 D) $15,413.80 E) $15,546.18 24) Which financial planning concepts should be helpful to a couple planning for how much money to start saving for their retirement? A) Reinvesting B) Compound interest C) Future values D) Present values E) All of the above
25) A method by which one can compare cash flows across timeeither as what a future cash flow is worth today (present value) or what an investment made today will be worth in the future (future value)is called A) time-value of money. B) compounding. C) simple interest. D) opportunity cost. 26) You have been saving toward the purchase of a new mountain bike. Five years ago, you placed $600 in a bank account, and you have since earned an annual rate of return of 12 percent. How much do you now have in your account? A) $1,057.41 B) $1,293.71 C) $978.70 D) $1,138.70 27) You have just remembered that four years ago you placed $1,000 in a bank account. If the bank was paying an annual rate of return of 8% during that time, how much should you have in your forgotten account? A) $1,253.03 B) $1,360.49 C) $1,321.92 D) $1,301.92 28) Your great-aunt wants to help with your college graduation party. She has just placed $5,000 dollars in a bank account that will earn an annual rate of return of 6%. If you graduate in four years, how much will be in your party account? A) $7,120.89 B) $6,142.96 C) $5,960.47 D) $6,312.38
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