Question

If you borrow $1,000 today to be paid back one year from today at 5% interest, the payment you will have to make in one year will be

	a.	?$1,050.
	b.	?$1,500.
	c.	$1,055.
	d.	?$1,005.

If the interest rate is 5%, the value of $1,000 at the end of 10 years is  

	a.	?$1,505.
	b.	?$1,628.89.
	c.	?$10,000.
	d.	?$57,665.04.

On payday you get paid in cash, so each week you put $10 into a shoebox in your closet so that you can buy a big-screen TV at the end of the year. In this situation, money is serving as a

	a.	unit of account.
	b.	medium of exchange.
	c.	store of value.
	d.	rainy day fund.

Answer 1

QUESTION – 1

Repayment after 1 Year = Borrowed Amount x [ 1 + r ] ⁿ

= $1,000 x [ 1 + 0.05 ] ¹

= $1,000 x 1.05

= $1,050

Hence, The Answer is “ a. $1,050”

QUESTION – 2

Future Value = Present Value x [ 1 + r ] ⁿ

= $1,000 x [ 1 + 0.05 ] ¹⁰

= $1,000 x 1.62889

= $1,628.89

Hence, The Answer is “ b. $1,628.89”

QUESTION – 3

The Answer is “ C. store of value. “

Store of Value can simply defined as a saving money to make a purchase of goods or services or pay bills at a later point of time