1. Thomas invests $121 in an account that pays 6 percent simple interest. How mu
ID: 2652141 • Letter: 1
Question
1. Thomas invests $121 in an account that pays 6 percent simple interest. How much money will Thomas have at the end of 4 years?
$144.11
$150.04
$157.30
$142.78
$152.76
2
Beatrice invests $1,430 in an account that pays 5 percent simple interest. How much more could she have earned over a 6-year period if the interest had compounded annually?
$23.64
$33.93
$57.34
$344.02
$40.72
3. What is the future value of $3,018 invested for 8 years at 5.4 percent compounded annually?
$3,724.62
$4,596.68
$7,001.14
$6,855.47
$3,734.93
4. What is the present value of $12,400 to be received 3 years from today if the discount rate is 5 percent?
$10,191.90
$11,247.17
$7,440.00
$10,711.59
$10,631.00
5.
Bob bought some land costing $15,590. Today, that same land is valued at $45,217. How long has Bob owned this land if the price of land has been increasing at 6 percent per year?
17.40 years
16.42 years
20.45 years
18.27 years
19.29 years
Explanation / Answer
1. b $ 150.04
= 121+121*6$*4 = 121+29.04 = 150.04
2. c $ 57.34
Interest as per SI= 1430*5%*6 = 429
Compound = 1430(1.05)6 = 1430*1.34=1916.34
Interest= 1916.34-1430=486.34
More= 486.34-429 = 27.44
3 b $ 4596.68
. FV= PV(1+r)n
=3018(1+.054)8 = $ 4596.68
4. 12400= PV(1.05)3
PV= 12400*.8638 = 10711.59
5. 45217= 15590(1.06)n
(1.06)n= 2.9
19.29 years
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