Test — Test Answers

A principal of $5,350 is placed in an account that earns 3.5% interest. If the interest is compounded annually, how much money will be in the account at the end of 4 years?

Suppose that a family wants to start a college fund for their child. If they can get a rate of 5.2%, compounded monthly, and want the fund to have a value of $55,500 after 20 years, how much should they deposit monthly? Assume an ordinary annuity and round to the nearest cent.

Tami would like to withdraw $10,364.10 at the end of each year, for 10 years, from an account paying 2.3% compounded annually. Determine the amount needed in the account for Tami to do this. Round to the nearest cent.

Trent is 25 years old and works for a company that matches his 401(k) contribution up to 5%. The interest rate for his 401(k) is 7.3%. If he puts away 10% of his $32,000 salary every year, what would the total of his 401(k) be in 10 years? Round your answer to the nearest cent.

The same amount of principal is invested in different accounts earning the same interest rate. Which of the following accounts would have the greatest accumulated value at the end of one year?

Determine the amount needed such that when it comes time for retirement, an individual can make monthly withdraws in the amount of $2,154 for 30 years from an account paying 5.1% compounded monthly. Round your answer to the nearest cent.

Which of the following retirement plans places a maximum amount that an individual can contribute to the fund in a given year at $5,000?

In the table below, we are given two annuity plans, A and B, and the amount invested into each plan every month. Given this information, determine which of the two investments is an ordinary annuity, and the amount invested over a 12 month period.

Approximately how much principal would need to be placed into an account earning 3.575% interest compounded quarterly so that it has an accumulated value of $68,000 at the end of 30 years?

How much more interest is earned on an investment of $12,585 at 3.5% interest over 5 years if the interest is compounded annually rather than earning simple interest?

Choose the proper rationale. “In the compound interest equation, time (the variable t) has the biggest effect on the outcome because...”

RuthAnn is 28 years old and is retiring at the age of 65. When she retires, she estimates that she will need an annual income of $32,523 for 30 years. If RuthAnn contributes 11% of her annual income to a 401(k) paying 7.1% compounded annually, will she reach her goal for retirement given that her annual income is $36,278.13? If she does not make her goal then state by what amount she will need to supplement her income. Round all answers to the nearest cent.

Seth has a bank account which pays 1.01% interest, compounded quarterly. Seth withdraws $4,567 from the account every quarter for 35 years. Assuming that Seth does not make any deposits into this account and that the withdrawals occur at the end of every quarter, find the initial value of the account, rounded to the nearest cent.

You have $12,000 to invest and want to keep your money invested for 8 years. You are considering the following investment options. Choose the investment option that will earn you the most money.

Ron is 25 years old and is retiring at the age of 65. When he retires, he will need a monthly income of $4,123 for 20 years. If Ron contributes 10% of his monthly income to a 401(k) paying 5.5% compounded monthly, will he reach his goal for retirement given that his monthly income is 3,142.23? If he does not make his goal then state by what amount he will need to supplement his income. Round all answers to the nearest cent.

Stan has made a $125.30 monthly deposit into an account that pays 1.5% interest, compounded monthly, for 35 years. He would now like to draw a monthly salary from the account. Determine the amount that Stan can withdraw each month for 20 years, if he plans on not having anything in the account at the end of the 20 year period and no future deposits are made to the account.

If monthly payments are made for 30 years, find the value for n in the following future value ordinary annuity formula. a. b. c. d. Please select the best answer from the choices provided

An investment of $7,650 earns interest at the rate of 5% and is compounded quarterly. What is the accumulated value of the investment at the end of 9 years?

An investment of $9,875 earns 4.8% interest compounded monthly over 12 years. Approximately how much interest is earned on the investment?

A principal of $4,570 is placed in an account that earns 4.5% interest. If the interest is compounded annually, how much money will be in the account at the end of 5 years?