Question

78.

a.

Gene received a $2500 holiday bonus from his employer. He placed the bonus in an account earning 4.25% interest compounded monthly. How much is in his account after 4 years.

	a.	$2814.10
	b.	$2750.40
	c.	$2962.40
	d.	$3020.40

b.

Lee just purchased a new house costing $125,000. Houses in the area are appreciating at the rate of 3.50% per year .If this rate holds steady for 5 years, what will the house be worth assuming that this 3.50% rate is compounded annually?

	a.	$ 135,332.60
	b.	$ 171,103.10
	c.	$162,307.10
	d.	$148,460.80

c.

Compute the Future value for Principal value of $5,000 with annual interest rate 6.5% compounded monthly at the end of 6 years.

	a.	$8456.25
	b.	$8565.20
	c.	$7377.15
	d.	$7433.30

Answer 1

ANSWER:

A) Deposit = $2,500

i = 4.25% per year or 4.25% / 12 per month

n = 4 years or 48 months

fv = deposit(f/p,i,n)

fv = 2,500(f/p,4.25%/12,48)

fv = 2,500 * 1.18

fv = $2,962.4

the correct answer is option c.

B) deposit = $125,000

i = 3.25% per year

n = 5 years

fv = deposit(f/p,i,n)

fv = 125,000(f/p,3.5%,5)

fv = 125,000 * 1.19

fv = 148,460.8

hence the correct answer is option d.

C) Principal value = $5,000

n = 6 years or 72 months

i = 6.5% per year or 6.5% / 12 compounded monthly

fv = principal value(f/p,i,n)

fv = 5,000(f/p,6.5%/12,72)

fv = 5,000 * 1.48

fv = $7,377.15

hence option c is the right answer.