Question
9. As winner of a breakfast cereal competition, you can choose one of the following prizes: a. $100,000 now. b. $180,000 at the end of
9. As winner of a breakfast cereal competition, you can choose one of the following prizes:
a. $100,000 now.
b. $180,000 at the end of 5 years.
c. $19,000 for each of 10 years.
If the interest rate is 12 percent, which is the most valuable prize?
10. Assume the following future values will be received at the end of each year. What is the interest rate if the future value of these amounts at the end of year 3 is equal to $2,393? Yr. 1 = $500; Yr. 2 = $750; Yr. 3 = $1,000
A. 6.5% B. 6.8% C. 7.0% D. 8.0% E. 8.9%
11. The amount of simple interest is determined by multiplying the amount in savings by the:
A. annual interest rate.
B. time period.
C. number of months in a year.
D. time period and number of months.
E. annual interest rate and the time period.
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