Chapter Test
Chapter
Chapter 7
Section
Chapter Test
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Solutions 18 Videos

Karl borrows $500 for 4 years at an annual simple interest rate of 12913 per year. What is the amount that must be repaid?

A $60

B $240

C $500

D $740

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Q1

Jasmine invests $400 at 8% annual interest. compounded annually. How much interest will be earned after 5 years?

A $160

B $187.73

C $560

D $587.73

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Q2

If an amount is invested at 6.5% per year, compounded semi-annually. for 3 years, determine the number of compounding periods and the interest rate per compounding period.

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Q3

If the annual interest rate is 3.9% and the interest per compounding period is 0.975%, what is the compounding period?

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Q4

An amount is deposited into an account that earns 9% per year, compounded quarterly. After 6 years, the amount in the account is $597.02. What is the present value?

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Q5

After 1 year. Nadia's investment is worth $256.80. After 2 years, the amount has reached $290.40.

a) How much simple interest is Nadia's investment earning per year?

b) What is the principal?

c) What is the annual simple interest rate per year?

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Q6

Deanna invests $500 at 8% per year simple interest. She puts money in the bank on July 1 and takes it out December 3. How much money does she take out?

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Q7

The time line for an annuity is shown.

a) What is the duration of this annuity? How can you tell?

b) Determine the annual rate of interest and the number of compounding periods per year.

c) Determine the amount of this annuity. d) Determine the total interest earned.

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Q8

Leon has $3000 that he wants to invest for 6 years. Which option should he choose, and why?

Option A: 5.2% annual interest, compounded quarterly

Option B: 5% annual interest, compounded monthly

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Q9

Colette takes out a loan for $2800 to buy a scooter. She plans to repay the loan in 3 years. The amount payable when the loan is due is $3420.51. What rate of interest, compounded annually, is Colette being charged?

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Q10

You invest $1000 at 6% per year, compounded quarterly, for 3 years. What interest rate, compounded monthly, will give the same results?

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Q11

An account paying 7.25% annual interest, compounded semi-annually, has a future value of $1429 in 8 years.

a) What is the present value of the account?

b) How much more interest will have been earned than if simple interest was paid?

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Q12

To have $5000 at the end of 8 years, how much do you need to invest today, at 6% per annum, compounded semi—annually?

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Q13

Jerry deposited $300 into an account that earns 6.7% annual interest, compounded daily. When he closed the account, the amount had grown to $348.56. How long was the money invested?

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Q14

Heather deposits $200 per week for 20 years into an account that earns 2.6% annual interest, compounded weekly.

a) Draw a time line to represent this annuity.

b) Determine the amount of the annuity.

c) How much interest will be earned?

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Q15

Niki needs $5200 for university tuition when she graduates from high school in 2 years. She plans to make deposits into an account that earns 6.5% per year, compounded bi-weekly.

a) Draw a time line to represent this annuity.

b) How much should she deposit every 2 weeks?

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Q17

Shira has invested $18 000 in an annuity from which she plans to withdraw $650 per month for the next 45 years. If at the end of this time period the balance of the annuity is zero, what annual rate of interest, compounded monthly, did the account earn?

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Q18

Instead of investing $3000 at the end of 5 years and $4000 at the end of 10 years, Steve wishes to make regular monthly payments that will amount to the same total after 10 years. Determine the monthly payment if interest is compounded monthly at an annual rate of 4%.

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Q19