Question

12.) If you save $3,000 a year, and earn 6.5% interest annually, how much will you have in your account after 25 years?

		$101,478.92
		$188,146.13
		$79,875.00
		$176,663.04

13.) If your credit card company tells you that the interest rate is 19.0%, what is the effective rate if it is compounded daily?

	A.	19.0%
	B.	29.19%
	C.	20.92%
	D.	14.45%

True ore false:

14.)In general, companies want to have the lowest current ratio it can safely have.

15.)Investors use mutual funds to help diversify their investments and to keep costs down.

Answer 1

12: Using financial calculator

Input: PMT = -3000

I/Y = 6.5

N = 25

Find FV as 176,663.04

Hence amount in account will be $176,663.04

13: C

EAR= (1+APR/m)^m-1

= (1+0.19/365)^365-1

=0.2092

=20.92%

14: False

Companies want to have a high currentratio which means that they have sufficient assets to pay their immediate obligations.

15: True

Mutual funds are a basket of investments in different companies.They allow the investor to diversify their investments and keep cost of transactions low.