Compound Interest Test
A = P( 1 + r/n)nt
Name ______________
P = Principal
r = Rate
n = Number of times compounded annually
t = Number of years
1.) How much money will Adam Baum have in 22 years
if he made a one time contribution of $3,700 at 10.77% and it
compounded daily?
2.) If Anna Graham purchased a CD for $9,000, at
9.50% for one year, compounded monthly,
how much money will she have at the end of that year?
3.) If Duane Pipe invested $10,000 at 43% for
one year, how much would he have if it
compounded semi annually?
4.) If Earl Lee Riser invested $27,200 in some real estate that was
appreciating at an annual rate of 15.8%, how much would he have
after 15 years?
(AER) Effective Rates
(1 + rate/n)n-1
5-10.) Fill in the missing Effective Rates
Effective Annual Rate Based on Frequency of Compounding
Nominal Rate Semi-Annual Quarterly Monthly
Daily
Continuous
1%
1.003%
1.004%
1.005% 1.005%
1.005%
5%
5.062%
5.095%
5.116% 5.127%
5.127%
10%
10.250%
10.381%
10.516%
10.517%
15.865% 16.075% 16.180%
16.183%
15%
20%
21.000%
21.551% 21.939% 22.134%
22.140%
30%
32.250%
33.547%
34.969%
34.986%
40%
46.410% 48.213% 49.150%
49.182%
50%
60.181% 63.209%
64.872%
.
11.) Compound Interest with Contributions
If Ali Katt (age 17) can save $20 per week and invest
that money in securities, where she
receives an effective annual yield of 12%, how
much money would she have when she turns 35?
Age
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
Compounding Interest with Regular Contributions
12.) How much will Ray Gunn have after 4 years investing $810 every year,
compounded monthly at 14%?
Compound Interest with Varying Contributions
13.) If Oliver Sutton invests $5000 the first year, $6000 the second, $8000
the third, and $1100 the fourth, how much will he have if he is getting 9.9%
compounded semi annually?
Graphing
14.) Graph Y = 20(1.15)X for X = 0 to X =20
* Please use graph paper (All data points between 0 & 20 must fit onto the
paper and a majority of the graph paper must be used)
Scientific Notation
15.) Convert 876,000,000 into scientific notation.
16.) Convert .00005 into scientific notation.
17.) Rewrite as a standard number 1.2876 x 1010
18.) Rewrite as a standard number 9.504x10-4
Simple Interest I = PRT
19.) How much interest will Sue Yu earn on an account that is gaining only
simple interest, if it yields 18% on a principal of $3300 for 16.5 years?
20.) On an account that is making only simple interest, how much money
would you have to start out with to make $100 at 12% over 19 years?
Payday Loans (Calculating the annualized rate) I = PRT
21.) If Tommy Gunn borrowed $300 and was charged $85, and the loan was
for 15 days, what is the annualized rate on that loan?
22.) How can payday loan places charge rates that are considered illegal on
other loans?
Rule of 72
23.) If Robin Andis Merrymen is earning an APY of 1%, how long will it
take for her money to double?
24.) If Russell Leeves is earning .08% in a checking account, how long will
it take to turn $10 into $20?
Multiple Choice
25.) The real rate of return after compounding has taken effect.
A.) Effective rate B.) Nominal Rate C.) Yield D.) APR
26.) An index of 30 stocks meant to represent the overall market.
A.)SP500 B.) NASAQ C)Mutual Fund D.) Dow Jones Industrial
Average
27.) Starting amount.
A.) Equity B.) Rate C.) Principal D.) Securities E.) none of these
28.) An index of 500 of the largest companies in the US.
A.) SP500 B.)NASDDAQ C.)Index Fund D.) stocks E.) none of these
29.) Share price X number of shares “floating around”.
A.) Long B.) Market Cap C.) Bid D.) Ask E.) Float F.) Long
30.) Another name for stocks.
A.) Equities B.)Securities C.)Fund D.) both A &B
31.) This index captures 75% of the US stock market and is therefore a good
indicator of the overall market.
A.) DOW B.) NASDAQ C.) Index Fund D.) none of these
32.) This is a mutual fund that has very low expenses because it simply buys
stock found in a particular index.
A.) NASDAQ B.) Index Fund C.) Mutual Fund D.) all of these E.) none
of these
Written Response Completely describe a mutual fund (5 pts.)