ECO360 Chapter 4 Quiz
According to the rule of 72: 72/interest rate is the number of years approximately it will take for an amount to double. the interest rate divided by the number of years invested will always equal 72%. any amount should double in value in 72 months if invested at 10%. 72 ×interest rate is the number of years it will take for an amount to double.
A
A monthly growth rate of 0.5% is an annual growth rate of: 6.00% 6.17% 5.00% 6.50%
C. 6.17%
One hundred basis points could be expressed as: 100.0% 0.10% 1.00% 0.01%
c
Which of the following best expresses the proceeds a lender receives from a one-year simple loan when the annual interest rate equals i? PV(1 + i) PV/i PV + i FV/i
A
A promise of a $100 payment to be received one year from today is: equally valuable as a payment received today if the interest rate is zero. more valuable than receiving the payment today. less valuable than receiving the payment two years from now. not enough information is provided to answer the question.
A.
Which of the following best expresses the payment a lender receives for lending money for three years? PV/(1+i)^3 PV/(1 + i)^3 FV/ (1 + i)^3 3PV
A.
The value of $100 left in a savings account earning 5% a year, will be worth what amount after ten years? $160.50 $162.89 $150.00 $159.84
B
Tom deposits funds in his savings account at the bank which is paying 3.5% interest. If he keeps his funds in the bank for one year he will have $155.25. What amount is Tom depositing? $147.50 $150.00 $151.75 $148.75
B
Which of the following expresses 4.85%? 4.850 0.0485 0.00485 0.485
B
The future value of $200 that is left in account earning 6.5% interest for three years is best expressed by which of the following? $200(1.065)/3 $200(1.065) × 3 $200(1.065)^3 $200(1.065)^n
C
What is the present value of $100 promised one year from now at 10% annual interest? $90.00 $89.50 $90.91 $91.25
C
Compound interest means that: interest rates will rise on larger loans. you get an interest deduction for paying your loan off early. you get an interest deduction if you take out a loan for longer than one year. you get interest on interest.
D
Farou invests $2,000 at 8% interest. About how long will it take for Farou to double his investment (e.g., to have $4,000)? 5 years 4 years 8 years 9 years
D
An investor deposits $400 into a bank account that earns an annual interest rate of 8%. Based on this information, how much interest will he earn during the second year alone? $25.60 $64 $34.56 $32
D.
What is the present value of $500 promised four years from now at 5% annual interest? $400.00 $607.75 $520.00 $411.35
D.