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Question 1 of 10
1. Question
What is(are) the difference(s) between the future value with compounded interest and the future value with simple interest?
I. The amount borrowed
II. The interest on the amount borrowed
III. The interestoninterest
IV. The interest borrowedCorrect
The difference between the future value with compounded interest and that with simple interest is the interestoninterest.
Incorrect
The difference between the future value with compounded interest and that with simple interest is the interestoninterest.

Question 2 of 10
2. Question
If the method of calculating interest is not stated, you should assume that the interest is?
I. Simple interest
II. Compound interest
III. Complex interest
IV. Diverse interestCorrect
If the method of calculating interest is not stated, you should assume that the interest is compound interest.
Incorrect
If the method of calculating interest is not stated, you should assume that the interest is compound interest.

Question 3 of 10
3. Question
If you invest $100,000 today in an investment that produces a return of 5 percent per year. What will the investment be worth in two years?
I. $110,220
II. $110,300
III. $110,250
IV. $110,250.25Correct
FV2 = $100,000 (1 + 0.05)2 = $100,000 (1.1025) = $110,250
Incorrect
FV2 = $100,000 (1 + 0.05)2 = $100,000 (1.1025) = $110,250

Question 4 of 10
4. Question
When an interest rate is stated in terms of a rate per year, but interest is compounded more frequently than once per year, what is the stated annual rate referred to as?
I. The annual percentage rate.
II. The general rate
III. The annual interest rate
IV. The annual compound rateCorrect
When an interest rate is stated in terms of a rate per year, but interest is compounded more frequently than once per year, the stated annual rate is referred to as the annual percentage rate (APR).
Incorrect
When an interest rate is stated in terms of a rate per year, but interest is compounded more frequently than once per year, the stated annual rate is referred to as the annual percentage rate (APR).

Question 5 of 10
5. Question
Suppose you invest $20,000 in an account that pays 12 percent interest, compounded monthly. How much do you have in the account at the end of five years?
I. $36,333.93
II. $36,334.99
III. $36,335
IV. $36,330.29Correct
FV = $20,000 (1 + 0.01)60 = $20,000 (1.8167) = $36,333.93
Incorrect
FV = $20,000 (1 + 0.01)60 = $20,000 (1.8167) = $36,333.93

Question 6 of 10
6. Question
If you invest $1,000 today in an account that pays 9 percent interest, compounded continuously. What will be the value in this account at the end of 10 years?
I. $2,460.60
II. $2,457.60
III. $2,458.60
IV. $2,459.60Correct
FV = $1,000 e0.09×10 = $1,000 e0.9
= $1,000 (2.4596) = $2,459.60Incorrect
FV = $1,000 e0.09×10 = $1,000 e0.9
= $1,000 (2.4596) = $2,459.60 
Question 7 of 10
7. Question
If you invest $5,000 in an account that earns 10 percent interest, how much more would you have after 20 years if interest compounds continuously instead of compounded semiannually?
I. $1,745.34
II. $1,765.34
III. $1,775.34
IV. $1,746.34Correct
FVcontinuously = $5,000 e0.1×20
= $5,000 (7.3891) = $36,945.28FVsemiannually = $5,000 (1 + 0.05)40
= $5,000 (7.0400) = $35,199.94Difference = $36,945.28 − 35,199.94 = $1,745.34
Incorrect
FVcontinuously = $5,000 e0.1×20
= $5,000 (7.3891) = $36,945.28FVsemiannually = $5,000 (1 + 0.05)40
= $5,000 (7.0400) = $35,199.94Difference = $36,945.28 − 35,199.94 = $1,745.34

Question 8 of 10
8. Question
If you borrow $10,000 and the interest on the loan is 8 percent per year, compounded continuously, what is the amount that you must repay at the end of four years?
I. $13,772.28
II. $13,773.28
III. $13,771.28
IV. $13,770.28Correct
Amount of repayment = $10,000 e(0.08)(4) = $10,000 e0.32 = $13,771.28
Incorrect

Question 9 of 10
9. Question
Suppose you deposit $1,000 in an account that earns 5 percent interest per year. If you do not make any withdrawals, how much will you have in the account at the end of 20 years?
I. $2,653.30
II. $2,654.30
III. $2,655.30
IV. $2,652.30Correct
Amount on deposit = $1,000 (1 + 0.05)20 = $2,653.30
Incorrect
Amount on deposit = $1,000 (1 + 0.05)20 = $2,653.30

Question 10 of 10
10. Question
If you borrow $10,000 and the interest on the loan is 8 percent per year, all payable at the end of the loan, what is the amount that you must repay if the loan is for four years?
I. $13,605.89
II. $13,601.89
III. $13,602.89
IV. $13,604.89Correct
Amount of repayment = $10,000 (1 + 0.08)4 = $13,604.89
Incorrect
Amount of repayment = $10,000 (1 + 0.08)4 = $13,604.89