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1 1 of 6 2/21/2013 8:18 AM PRINTABLE VERSION Quiz 4 Question 1 Luke invested $130 at 4% simple interest for a period of 7 years. How much will his investment be worth after 7 years? a) $ b) $ c) $ d) $ e) $ Question 2 Mr. Smith wishes to retire in 13 years. When he retires he would like to have $300,000 in his bank account. Mr. Smith's bank pays 8% per year compounded annually. How much should he deposit now to attain his goal? a) $110, b) $110, c) $110, d) $110, e) $110, Question 3 A grandmother deposited $5,000 in an account that pays 6% per year compounded annually when her granddaughter was born. What will the value of the account be when the granddaughter reaches her 10 th birthday? a) $8,974.24

2 2 of 6 2/21/2013 8:18 AM b) $8, c) $8, d) $8, e) $8, Question 4 In order to purchase a new freezer in 2 years, the Steakhouse Restaurant has decided to deposit $1,500 in an account that earns 3% per year compounded monthly for 2 years. How much money will be in the account in 2 years? a) $1, b) $1, c) $1, d) $1, e) $1, Question 5 Stor-Away Co. needs to buy a new forklift. The company decides to deposit $2,300 in an account that earns 2% per year compounded semiannually. How much will the investment be worth in 4 years? a) $2, b) $2, c) $2, d) $2, e) $2, Question 6 John wishes to set up an account for his grandfather so that he can have some extra money each month. John wants his grandfather to be able to withdraw $110 per month for the next 2 years. How much must

3 3 of 6 2/21/2013 8:18 AM John invest today at 6% per year compounded monthly so that his grandfather can withdraw $110 per month for the next 2 years? a) $2, b) $2, c) $2, d) $2, e) $2, Question 7 John got a part time weekend job at a local restaurant to save for a new car. He plans on depositing $190 per month for the next 3 years in a savings account with a rate of 3% per year compounded monthly. How much will he have saved toward his down payment at the end of the 3 year period? a) $7, b) $7, c) $7, d) $7, e) $7, Question 8 Fred purchased a new car. His monthly payments are $550 per month. He will be paying on his car for 5 years, and the loan costs 9% per year compounded monthly. What was the original cost of the car? a) $26, b) $26, c) $26, d) $26, e) $26,495.36

4 4 of 6 2/21/2013 8:18 AM Question 9 Jackson deposits $110 each month into a savings account earning interest at the rate of 7% per year compounded monthly. How much will he have in this account at the end of 6 years? a) $9, b) $9, c) $9, d) $9, e) $9, Question 10 Esther pays $467 per month for 6 years for a car. She made a down payment of $3,700. If the loan costs 7.1% per year compounded monthly, what was the cash price of the car? a) $31, b) $45, c) $23, d) $27, e) $38, Question 11 You borrowed $13,000 from your bank to build a small cabin on your property. The bank will charge 7% per year compounded quarterly. You decide to payoff this loan in 3 years by making quarterly payments. How much are your quarterly payments? a) $1, b) $1, c) $1, d) $1, e) $1,210.48

5 5 of 6 2/21/2013 8:18 AM Question 12 Your brother would like to have $27,000 in 2 years for the purchase of a new car. What monthly payment should he make into an account paying 6% per year compounded monthly to attain his goal? a) $1, b) $1, c) $1, d) $1, e) $1, Question 13 A school realizes that they need a new copy machine for their main office. The copy machine costs $4,500. After speaking with the financial advisor, they decide to pay 10% of the cost of the machine in cash and finance the rest through their credit union. How much is their monthly payment if the credit union will charge 2% per year compounded monthly for 2 years? a) $33.44 b) $ c) $ d) $ e) $23.44 Question 14 The Flores Family loves to go sailing on the weekends. Mr. Flores has decided to purchase a more spacious sailboat. The sailboat he is interested in buying in 2 years will cost him $20,000. An account at Invest Well Bank earns 6% per year compounded monthly. How much should Mr. Flores deposit in this account at the beginning of each month to be able to pay cash for the sailboat in 2 years? a) $ b) $747.06

6 6 of 6 2/21/2013 8:18 AM c) $ d) $ e) $786.41

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