Question 1

Some time ago Jeremie purchased a house for $600,000. Today his house costs $800,000. If the price of the house has been increasing at 5.6% per year, how long has Jeremie owned the house?

1. 5.67 years
2. 5.47 years
3. 5.90 years
4. 6.09 years
5. 5.28 years

Question 2

Your friend Latisha borrows $3,000 from you for 7 years. She promises to pay you back $4,000. What effective annual rate of interest are you receiving?

1. 5.92%
2. 7.46%
3. 4.91%
4. 3.45%
5. 4.20%

Question 3

Consider the following timeline detailing a stream of cash flows:

If the current market rate of interest is 6%, then the future value of this stream of cash flows at the end of period 5 is closest to:

1. $1723
2. $1500
3. $1288
4. $1626
5. $2007

Date Cash flow