When interest is added to the principal and interest is again calculated on the new balance, the process is known as compound interest. (Points: 2)
a.) True
b.) False
2.聽The terms of a loan indicate how often interest is compounded. (Points: 2)
a.) True
b.) False
3.聽A compound interest table shows the compounded amount per dollar of principal. (Points: 2)
a.) True
b.) False
4.聽To compound daily means to compound 360 times a year. (Points: 2)
A.) True
B.) False
5.聽The effective rate of a transaction can be calculated by dividing the interest for one year by the principal. (Points: 2)
A.) True
B.) False
6.聽The term "nominal rate" means the same as "true rate." (Points: 2)
A.) True
B.) False
7.聽The interest on $4,200.00 at 8% compounded semiannually for 10 years is $6,292.40. (Points: 2)
A.) True
B.) False
8.聽The effective rate is: (Points: 2)
A.) the stated rate
B.) the nominal rate
C.) the true semiannual rate
D.) the true annual rate
E.) none of the above
9.聽In a loan of 8% compounded quarterly, what is the periodic interest (Points: 2)
A.) 2.5%
B.) 6%
C.) 2%
D.) 4%
10.聽Present value does not: (Points: 2)
A.) find the present dollar amount
B.) use the tables
C.) know the present dollar amount
D.) know the future value
E.) none of the above
11.聽Bill deposits $16,500.00 into the National Bank which pays 10% interest that is compounded semiannually. By using Table 10-1, what will Bill have in his account at the end of 5 years? (Points: 2)
A.) $26,786.76
B.) $26,876.69
C.) $6,876.67
D.) $26,573.42
E.) none of the above
12.聽Josh is having difficulty deciding whether to put his savings in the Mercantile Bank or the Boatmen's Bank. Mercantile offers a 10% rate compounded quarterly while Boatmen's offers 12% compounded semiannually. Josh has $40,000.00 to invest and expects to withdraw the money at the end of 5 years. (Use Table 10-1 from the textbook.) The best deal is: (Points: 2)
A.) Mercantile Bank
B.) Mercantile Bank for the last two years
C.) Boatmen's Bank for the first two years
D.) Boatmen's Bank
E.) none of the above
13.聽Don deposited $27,500.00 in Trader's Bank at an interest rate of 12% compounded quarterly. (Use Table 10-1 from the textbook.) The effective rate was: (Points: 2)
A.) 12.55%
B.) 12%
C.) 13%
D.) 14.0%
E.) none of the above
14.聽Lisa wants to attend the University of Colorado. She will need to have $80,000.00 five years from today. Lisa is wondering what she will have to put in the bank today so she will have $80,000.00 in five years. Her bank pays 10% compounded quarterly. By using Table 10-3 in the textbook, the amount Lisa will need to deposit is: (Points: 2)
A.) $48,281.68
B.) $49,113.60
C.) $48,821.60
D.) $49,113.06
E.) none of the above
15.聽John estimates that he will need $15,000.00 for new equipment in 10 years. John decided that he would put aside the money now so that in 10 years the $15,000.00 will be available. His bank offers him 8% interest compounded semiannually. (Use Table 10-3 from the textbook.) How much must John invest? (Points: 2)
A.) $6,845.85
B.) $36,175.71
C.) $6,584.80
D.) $6,845.08
E.) none of the above|||You did a lot of typing for me not to answer any of these for you. Don't be lazy. Put forth a little effort.|||Why bother???
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