USE A FINANICAL CALUCLATOR FOR THE PROBLEMS BELOW:

1) Consider two investment opportunities, Tweedle Dee and Tweedle Dum. Tweedle Dee pays interest at the rate of 12% per year, compounded monthly. Tweedle Dum pays interest at the rate of 11.5% per year, compounded daily. Which investment is better?

		Tweedle Dee or Tweedle Dum
		Tweedle Dee
		Tweedle Dum
		Tweedle Dee nor Tweedle Dum

2) If you lend your roommate $50 to go out on Friday night and ask him to pay you back with simple interest in 4 years at 10%, how much will he pay you back?

$73.21

$20

$70

3) If you deposit $1,000 each year, starting the end of first year, in an account that pays 10% interest per year, compounded annually, what will be the balance in the account after you have made ten payments, assuming you make no withdrawals from the account?

$37,159

$15,937

$73,951

None of the above

4) If I invest $100 today in an account that earns 10% per year, compounded semi-annually, how much will I have in this account at the end of twenty years if I make no withdrawals?

$100

$609

$407

$704

5) Chris refuses to retire until her retirement account has a balance of at least $300,000. Chris also refuses to make any additional deposits into the account. The account currently has a balance of $100,000 and earns 4% per year, compounded quarterly. How long does Chris have before she will retire?

27 years and 9 months

72 years and 9 months

92 years and 7 months

None of the above

6) If I deposit $200 in an account that pays 5% interest, compounded annually, what will be the balance in the account at the end of ten years if I make no withdrawals?

$325.78

$253.78

$782.35

$378.25

7) Your 25-year old younger sister started smoking. She is currently paying $24.00 per carton per week. You explain to her that this is $1248 per year ($24 x 52). She says big deal. You then tell her that if she were to save that same amount and invest it in the stock market, she would have a significant amount of money to retire when she turns 65. Your sister wants to know how much she would have. You know that over the long-term, the stock market has returned 12% interest compounded annually. You tell your sister that if she stops smoking she will have_________ when she retires.

$9,573

$95,732

$957,328

There is no way that $24.00 per week will equal a,b, or c above.

8) What is the present value of $400 in annual deposits into an account paying 8% interest over the next 10 years?

$2684.00

$6842.00

$8426.00

$4268.00

9) You need $12,000 at the end of 5 years to use as a down payment on a beachfront lot in Hatteras, NC. You found a Vanguard Money Market account that pays 10% compounded annually. How much do you need to deposit each year to reach your goal?

$965.60

$2965.60

$1965.60

$95.60

I should have attended class the day we discussed time value of money

10 Your best friend has written you an IOU for last nights bar tab agreeing to pay you $800 at the end of 6 years at the same interest rate you now earn on your savings account. You currently are earning 7% interest compounded annually. What was your friends bar tab?

		$33.36
		$333.60
		$532.80
		$833.36
		You are going to send your friend to Alcoholics Anonymous 11) What is the present value of 26,255 received in 29 years at a 0.2% rate? 12) What is the future value of 3,757 invested for 7 years at a 0.04 rate?