Compound Interest and Answer

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Name________________________________ UDC – Quantitative Reasoning I EXAMINATION 3 – Personal Finance – Exponential Functions Fall - 2012 Instructions: This exam is worth 100 points. Read each question carefully. Answer each question clearly and concisely. Please, show All of Your Work. Remember, I do not believe in magic!!!

A) B) Answer C) D)

1. What is the simple interest for a principal of $620 invested at a rate of 7% for 3 years? $173.60 $130.20 $172.60 $129.20

A) B) C) Answer D) E)

2. If you borrow $1100 for 5 years at 14% annual simple interest, how much must you repay at the end of the 5 years? $770.00 $2215.13 $2117.96 $77,000 $1870.00

A)Answer B) C) D)

3. How much interest is earned in 5 years on $2,900 deposited in an account paying 7.1% interest, compounded quarterly? $1,223.07 $1,186.44 $266.68 $1,029.50

A)Answer B) C) D) E)

4. Suppose Emily Yu deposited $1300 in an account that earned simple interest at an annual rate of 8% and left it there for 4 years. At the end of the 4 years, Emily deposited the entire amount from that account into a new account that earned 8% compounded quarterly. She left the money in this account for 4 years. How much did she have after the 8 years? $2355.70 $2427.96 $3233.87 $2457.65 $4850.81

A) B) C) Answer D)

5. If $1,390 is invested in an account which earns 9% interest compounded annually, which will be the balance of the account at the end of 14 years? $11,106,193 $3141 $4645 $21,211

A) B) C) Answer D)

6. Susan bought a 6-month $1100 certificate of deposit. At the end of 6 months, she received $99 simple interest. Find the annual rate of simple interest paid. 18% 16% 15.0% 9%

A) B) Answer C)

7. What lump sum should be deposited in an account that will earn at an annual rate of 8%, compounded quarterly, to grow to $140,000 for retirement in 15 years? $137,052.73 $42,335.45 $24,137.93

D) E)

$63,636.36 $42,669.52

A) B) C) D) Answer E)

8. How much money should be...
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