25. Precision Engineering invested $110,000 at 6.5 percent interest, compounded

Question

25.          Precision Engineering invested $110,000 at 6.5 percent interest, compounded annually for 4 years. How much interest on interest did the company earn over this period of time?

A.            $2,481.25

B.            $2,911.30

C.            $3,014.14

D.            $3,250.00

E.            $3,333.33

26.          When you were born, your parents opened an investment account in your name and deposited $500 into the account. The account has earned an average annual rate of return of 4.8 percent. Today, the account is valued at $36,911.22. How old are you?

A.            74.47 years

B.            76.67 years

C.            81.08 years

D.            87.33 years

E.            91.75 years

Explanation / Answer

Hello,

25. B, (464.75 * 3 + 494.95875 * 2 + 527.1310688)

26. E 500 * (1.048) ^ 91.752 = 36,911.22, so they rounded to 91.75.

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