# روان طلال عبد الجليل بري

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S U F F O L K   U N I V E R S I T Y

Instructor: Ki C. Han

Name _____________________

1. ( T or F ) Other things being the same, the future value of an annuity is higher than that of an annuity due.

2. ( T or F ) As the interest rate increases, the future value of a lump sum increases.

3. ( T or F ) Other things being the same, depositors can earn more interest under quarterly compounding than under monthly compounding.

4. If an investor invests \$2,500 in a savings account that pays 5% interest, after 20 years he or she will have accumulated _______.

a. \$3,442                               b. \$5,000                               c. \$6,221                               d. \$6,633

5. If an investment earns 11% per year, how long would it take for a sum of money to triple in size?

a. between 6 & 7 years       b. between 8 & 9 years       c. between 10 & 11 years   d. between 12 & 13 years

6. You want to retire a millionaire.  How much must you invest at the end of each month for the next 40 years to accumulate \$1,000,000?  The interest rate is 12% per year.

a. \$85                                     b. \$162                                  c. \$320                                   d. \$755

7. Your broker offers to sell you a note for \$13,250 that will pay \$2,500.50 per year for 10 years. If you buy the note, what rate of interest will you be earning?

a. 7.2%                                b. 10.5%                                  c. 13.6%                                                d. 15.3%

8. If an investment of \$10,000 today earns 9% in each of the next two years, and then earns 5% per year for three years after that, how much will the investment be worth at the end of the five years?

a. \$13,300                             b. \$13,754                             c. \$13,794                             d. \$14,402

9. You deposit a single amount of \$50,000 in a savings account that pays 7.6% annual interest (compounded quarterly). How much will you have at the end of four and one-half years?

a. \$68,145                             b. \$70,163                             c. \$72,664                             d. \$75,050

10. You will deposit \$5,000 at the end of each of next 5 years. If the interest rate is 8% (annual compounding), how much will you have accumulated in 20 years?

a. \$33,460.59                       b. \$57,667.89                       c. \$72,894.90                       d. \$93,049.24

11. You have just been notified that you won the lottery. You will be paid 10 annual payments of \$1,000,000, with the first one starting today. Using an interest rate of 8% (annual compounding), how much did you really win (in terms of present value)?

a. \$6,345,879.98                 b. \$7,246,887.91                 c. \$8,564,778.01                  d. \$10,000,000.00

12. Ten years ago you invested \$10,000. Today you received \$25,000. What is your annual return?

a. 9.6%                               b. 10.5%                                   c. 12.7%                                             d. 13.3%