ࡱ> @B? bjbj 3&eePPPPPddddx$d>/kkk.......03r.Pkkkkk.PP.k PP.k.=,=-wSi u. -./0>/#-"4"44=-"4P=-kkkkkkk.."kkk>/kkkk"4kkkkkkkkk : Finance Review Questions You invest $15 000 at 3% per annum, simple interest. After 4 years, what is the amount in your account? Answer: $16 800 You borrow $3000 for 1 year. The amount you repaid was $3090.00. What is the annual simple interest rate? Answer: 3% You deposit $12 500 into an account that earns 10% per year simple interest. How long will it take for the amount in the account to reach $16 250? Answer: 3 years You borrow $3500, which you plan to repay in 5 years. You are charged 5% per year, simple interest. How much interest must you pay? Answer: 875 You deposit $1000 into an account that earns 10% per year, compounded semi-annually. After 3 years, what is the total amount in the account? Answer: $1340.10 You deposit $800 into an account that earns 2% per year, compounded quarterly. After 5 years, how much interest have you earned? Answer: $83.92 You apply for a $500 loan, which you plans to repay in 4 years. You are told by the loan officer that the amount payable when the loan is due is $738.73. What rate of interest, compounded semi-annually, are you being charged? Answer: 10% You deposit $20 into an account that earns 6% annual interest, compounded monthly. How long will it take to have $22.54 in the account? Answer: 2 years. You borrow $2000, and plan to repay the loan in 2 years, at which point you will owe $2345.78. What rate of interest are you charged, assuming it is compounded monthly? Answer: 8% What amount should be invested today so that there will be $5000 in an account in 4 years, if interest is earned at a rate of 5% per annum, compounded semi-annually? Answer: $4103.73 You need $15 000 in 10 years to buy a car. Your investment earns interest at a rate of 16% per year, compounded quarterly. What is the value needed today to afford the car? What is the interest earned? Answer: $3124.34, interest $11 875.66 You receive a financial gift from your grandparents which you invest at 12% annual interest, compounded annually. You are advised that the investment will be worth $12 500 in 8 years. How much was the gift? Answer: $5048.54 In 2 years, an investment earning 7% interest per year, compounded daily will have a value of $1000. What was the initial investment? Answer: $869.37 At the end of 6 months for 3 years, you deposit $2000 into an account that earns 7% per annum, compounded semi-annually. What is the amount of the annuity after the 3 years? Answer: $13 100.30 You deposit 2 dollars every day for 5 years. Interest is earned at a rate of 15% per year, compounded daily. What is the amount of the annuity, and how much interest is earned? Answer: $5434.48, interest earned was $1784.48 You decide to make regular deposits every 2 weeks into an account that earns 13% annual interest, compounded bi-weekly. You hope to have $59 218.03 at the end of 2 years. What is the amount of the regular payment you need to make? Answer: $1000 At the end of every 6 months for 4 years, you deposit $7000 into an account that earns 6% per annum, compounded semi-annually. What is the amount of the annuity after the 4 years? Answer: $62 246.35 You deposit $3500 every 3 months for 7 years. Interest is earned at a rate of 8% per year, compounded quarterly. What is the amount of the annuity, and how much interest is earned? Answer: $129679.24, interest earned was $31 679.24 You are going to college this year, and you need to take out $3500 every 3 months. Your college fund is in an account that pays 8% interest, compounded quarterly. What is the amount of money that you need in the account now to pay for your expenses for 3 years at college? Answer: $37 013.69 You borrow $29 618.36 to buy a car. You want to pay it off in 10 years. If the bank is charging you 6% interest, compounded monthly, what is the regular payment every month? Answer: $328.82 You borrow $65 445.03 to buy an RV. The loan was negotiated at 5.7% interest, compounded bi-weekly. You would like to pay off the loan in 15 years. How much do you need to pay down every 2 weeks? Answer: $249.82 For university, you need about $7000 to cover tuition and books every year for 4 years. (Not including living in residence!) How much do you have to invest now to fund your university education, if your investment account pays 7% interest, compounded annually? 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