Question 11

You set up an investment plan in which you put $1000 at the end of each year. How much money will you have accumulated in the fund after 20 years, if your investment plan earns 8% compounded annually?

A. $36,785.59

B. $67 998.07

C. $72,757.93

D. $45,762.00

Question 12

How much do you have to invest today at an annual rate of 8%, if you need to have $10 000 six years from today?

A. $5963

B. $6302

C. $3150

D. $2938

Question 13

In the equation below, what does the exponent 3 represent?

$133.10=$100(1+0.1)⁵

a. the future value of an investment

b. the present value of an investment

c. the annual rate of interest paid

d. the number of periods that the present value is left on the deposit

Question 14

You are trying to accumulate $20,000 at the end of five years by contributing a fixed amount at the end of each year. You initially decide to contribute $3,000 per year but find that you are coming up short of the $20,000 goal. What could you do to increase the value of the investment at the end of year 5?

A. Invest in an investment that has a lower rate of return.

B. Invest in an investment that has a higher rate of return.

C. Cancel the investment plan and start fresh.

D. Contribute a smaller amount each year.