MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Find the compound amount for the deposit. Round to the nearest cent.

1) $1980 at 8% compounded annually for 19 years

A) $4831.20 B) $4989.60 C) $7912.12 D) $8545.09

Find the final amount (rounded to the nearest dollar) in this retirement account, in which the rate of return on the

account and the regular contribution change over time.

2) $300 per month invested at 4%, compounded monthly, for 15 years; then $600 per month invested

at 7%, compounded monthly, for 15 years.

A) About $418,557 B) About $759,769

C) About $400,507 D) About $264,005

Use an amortization table to solve the problem. Round to the nearest cent.

3) The monthly payments on a $56,000 loan at 12% annual interest are $616.56. How much of the

first monthly payment will go toward interest?

A) $73.99 B) $560.00 C) $542.57 D) $672.00

Solve the problem.

4) Find the face value (to the nearest thousand dollars) of the 30-year zero-coupon bond at 5.1%

(compounded semiannually) with a price of $9933.

A) $60,800 B) $45,000 C) $60,000 D) $45,500

5) Lou has an account with $10,000 which pays 9% interest compounded annually. If to that account,

Lou deposits $5000 at the end of each year for 5 years, find out the amount in the account after the

last deposit.

A) $39,923.55 B) $44,423.55 C) $45,309.79 D) $29,923.55

Find the future value of the ordinary annuity. Interest is compounded annually, unless otherwise indicated.

6) PMT = $2500, r = 4.3% interest compounded quarterly for 16 years

A) $461,032.50 B) $223,570.98 C) $109,329.20 D) $228,474.36

Find the amount of each payment to be made into a sinking fund so that enough will be present to accumulate the

following amount. Payments are made at the end of each period.

7) $8300; money earns 5% compounded annually; 13 annual payments

A) $220.08 B) $423.50 C) $468.58 D) $521.45

Find the present value of the ordinary annuity.

8) $680,000 quarterly payments for 10 years; interest rate is 5.6% compounded quarterly.

A) $62,372,473.31 B) $20,719,025.14 C) $76,423,832.00 D) $6,304,437.99

Find the amount that should be invested now to accumulate the following amount, if the money is compounded as

indicated.

9) $24,000 at 7% compounded annually for 6 yr

A) $15,992.21 B) $36,017.53 C) $17,111.67 D) $8007.79

Find the present value of the future amount. Use simple interest and assume 365 days in a year. Round to the nearest

cent.

10) $20,000 for 3 months; money earns 6%

A) $295.57 B) $19,704.43 C) $19,801.98 D) $18,867.92

Solve the problem.

11) A bank gives you two options to choose from for your investments:

Option A: 8% annual interest rate compounded yearly; and

Option B: 7.9% annual interest rate compounded quarterly.

Decide which is the better investment at the end of 2 years.

A) Option B B) Option A

Find the compound interest earned by the deposit. Round to the nearest cent.

12) $1560 at 7.3% compounded annually for 13 years

A) $1480.44 B) $2073.47 C) $1366.56 D) $2338.71

Find the present value of the ordinary annuity.

13) Payments of $88 made quarterly for 10 years at 5.7% compounded quarterly

A) $2687.12 B) $2668.99 C) $2719.43 D) $2711.28

Find the payment necessary to amortize the loan.

14) $7000; 9% compounded semiannually; 10 semiannual payments

A) $963.02 B) $883.65 C) $1090.73 D) $884.65

Find the lump sum deposited today that will yield the same total amount as this yearly payment (made at the end of

each year for 20 years at the given interest rate, compounded annually).

15) $14,700 at 8%

A) $144,283.44 B) $141,172.92 C) $144,326.77 D) $147,246.96

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