Instructions: Circle the letter that corresponds with the correct answer for each question. Questions 1-16 is worth 2 marks each. Question 17 and 18 are worth 4 marks each At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years? A) 6% B) 5% C) 7% D) 8% 2. A friend plans to buy a high-tech drone and can afford to set aside $13,200 toward the purchase today. If your friend can earn 5.0%, compounded yearly, how much can your friend spend in four years on the purchase? Round off to the nearest $1 A) $10,860 B) S16,044 C) S16,501 D) S13,860 3. You just purchased a parcel of land for $10,000. If you expect a 12% annual rate of return on your investment, how much will you sell the land for in 10 years? A) $33,000 B) S31,060 C) $38,720 D) $34,310 4 If you put $7,000 in a savings account with a 10% nominal rate of interest compounded monthly, what will the investment be worth in 21 months (round to the nearest dollar)? A) $8,275 B) S8,327 C) $7,148 D) $5,933 What is the value of $7,500 invested at 7.5% compounded quarterly for 4.5 years (round to the nearest $1)? A) S10,478 B) S10,100 C) S10,385 D) S10,446 S. Use the following information to answer question 6-8 A Max, Inc. deposited $2,000 in a bank account that pays 12 % interest annually What will the dollar amount be in four years, assuming that interest is paid annually? A) $3,224 B) S3,100 C) S3,111 D) S3,148 6. What will the dollar amount be if the interest is compounded semiannually for those four ears? A) $3,100 B) S3,188 C) $3,240 D) $3,290 7. How many periods would it take for the deposit to grow to $6,798 if the interest is compounded semiannually? A) 17 8. B) 19 C) 21 D) 25 9 What is the present value of $12,500 to be received 10 years from today? Assume a discount rate of 8% compounded annually and round to the nearest $1.00 A) $5,790 B) S11,574 C) S9,210 D) S17,010 You have been offered a credit card with an interest rate of 1.5 % per month. This is equivalent to and effective annual rate (EAR) of A) 16.07% B) 18.00% C) 15.39 % D) 19.56% 10. A friend of yours would like you to lend him $5,000 today to be paid back in 5 annual payments. What would be the equal annual end-of-year payment on this loan if you charge your friend 7% interest? A) $869.45 B)S1,000.00 C) S1,219.5 D) S1,350.00 11 12. Hillary invest $750 every six months at 8% compounded semi-annually. How much would she accumulate at the end of 10 years? A) S10,864 B) $22,334 C) $22,847 D) $21,730