Investment

You invest $1,000 in an account that pays interest at 12 percent annual rate, compounded quarterly. How much would your investment

grow to in 5 years?

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a. 1,762

b. 1,272

c. 1,806

d. 1,600

You invest $1,000 in an investment that grew to $60,000 in 35 years. What annual rate of interest did you earn?

a. 5.25%

b. 12.41%

c. 10.17%

d. 8.24%

You plan to purchase a BMW M5 sedan in six years for $85,000. You have saved $30,000 for the car and plan to invest this money to purchase the car. What rate of interest would you have to earn to be able to purchase the car after six years?

a. 17%

b. 13%

c. 15%

d. 19%

You plan to purchase a BMW M5 sedan for $85,000. You have saved $30,000 for the car and plan to invest this money to purchase the car. How many years would you have to wait if you can earn 12 percent annual rate, compounded quarterly?

a. 8.81

b. 35.23

c. 6.53

d. 19.54

How long would it take to quadruple your money at an annual rate of 8 percent?

a. 19 years

b. 18 years

c. 17 years

d. 16 years

You purchased a rare baseball card for $6,000 as an investment. Three years later you accidentally spilled coffee on it while working on your finance homework, and were forced to sell it for $4,500. What rate of return did you earn? (Hint: It is negative!)

a. –8.86%

b. –14.22

c. –9.14%

d. –11.1%

Your rich uncle has promised to pay you $20,000 as a gift upon graduation in 2 years. You plan to invest it for 5 more years at 8.5 percent compounded monthly and use the money you have after 7 years as a down payment to purchase a house. What will be the amount of the down payment?

a. 36,180

b. 28,500

c. 30,540

d. 40,400

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