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) $169.40 b) $166.40 c) $168.40 d) $167.40 e) $164.40 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) $110,306.38 b) $110,309.38 c) $110,305.38 d) $110,307.38 e) $110,311.38 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 of 6 2/21/2013 8:18 AM b) $8,954.24 c) $8,944.24 d) $8,934.24 e) $8,924.24 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) $1,622.64 b) $1,592.64 c) $1,572.64 d) $1,632.64 e) $1,552.64 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) $2,530.57 b) $2,460.57 c) $2,490.57 d) $2,500.57 e) $2,470.57 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 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) $2,451.92 b) $2,481.92 c) $2,471.92 d) $2,441.92 e) $2,461.92 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) $7,177.91 b) $7,147.91 c) $7,127.91 d) $7,167.91 e) $7,157.91 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) $26,493.36 b) $26,492.36 c) $26,494.36 d) $26,499.36 e) $26,495.36
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) $9,808.70 b) $9,806.70 c) $9,805.70 d) $9,807.70 e) $9,811.70 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) $31,014.63 b) $45,469.53 c) $23,614.63 d) $27,314.63 e) $38,069.53 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) $1,230.48 b) $1,200.48 c) $1,190.48 d) $1,250.48 e) $1,210.48
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) $1,091.66 b) $1,061.66 c) $1,081.66 d) $1,071.66 e) $1,031.66 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) $172.29 c) $208.03 d) $182.29 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) $935.16 b) $747.06
6 of 6 2/21/2013 8:18 AM c) $845.78 d) $816.41 e) $786.41