1.

Assuming annual compounding and a 10% interest rate, $500 invested today would be worth $____ at the end of
3 years. 665.502. Assuming simple interest and a 12% interest rate, total interest earned over a 4 year period on a
$10,000 investment would be $_______. 4,800.00 3. Invested at 6%, $10,000 today would be worth approximately
$20,000 in ____years. 12 4. Assuming a 20% interest rate, an investment of $1,000 at the end of each of the next 3
years would be worth $_____. 3,640.00 5. Assuming a 20% interest rate, an investment of $1,000 at the beginning
of each of the next 3 years would be worth $_____. 4,368.00 6. Assuming a discount rate of 8%, $3,000 received
three years from now is worth $_____ today. 2,382.00 7. Assuming a 10% discount rate, the present value of $5,000
received at the end of each of the next three years is worth $_____ today.12,434.00 8. In the goal planning process,
the first step (making goals concrete) involves specifying particular goals, indicating when they will be accomplished,
and how much they cost if undertaken today. 9. For many young people who anticipate rising incomes, a desirable
savings schedule is likely to be one that shows a zero ending balance and rising annual deposits. 10. Which factor
below would increase the required annual deposit amounts in a savings plan? Inflation rates increase 11. $20,000
invested today to earn 6% annually for the next ten years will grow to what amount? $35,816 12. $4,000 received
five years from now is worth how much today, assuming a 5% discount rate? $3,134 13. What is the present value
of a 10-year, $3,000 ordinary annuity, assuming a 4% discount rate? $24,332 14. An ordinary annuity (20 years,
8% discount rate) has a future value of $16,000. If it was an annuity due, its future value would be $17,280 15. An
ordinary annuity assumes _______of period payments while an annuity due assumes _______of period payments. End,
Beginning 16. What approximate rate of interest must you earn to double an investment's value in 4 years? 18%
17. Money invested at 3% interest will take about how many years to double in value? 24 18. The target value of
an ending balance in the final year of a savings plan should be approximately zero 19. Which response below is a
poor strategy with respect to goal planning? Once established, a savings plan should not be changed. 20. In
preparing a schedule to determine a required annual savings amount, the amount determined Is most useful as a
check on arithmetic accuracy. 21. If college costs are increasing at a 10% annual rate, and if one year of college
now costs $30,000, how much will one year cost 20 years from now? $201,825 22. You plan to retire in 30 years
and want to accumulate $500,000 in a retirement nest egg. How much must you invest each year to reach the goal
(assume end of year investments and an earning rate of 12%)? $2,072 23. The text's illustration of the future value
of $1,000 invested at 10% or 8 % over a 40 year period shows that at either rate More money is accumulated in the
last 10 years than in the first 30 years. 24. The text's illustration of the future value of $1,000 invested at 10% or 8
% over a 40 year period The 40-year accumulation at the 10% rate is more than double the accumulation at the 8%
rate. 25. You would like to accumulate $40,000 to buy a home in 10 years. You have received an inheritance of
$9,000 that you can invest for this purpose. What minimum rate of return is necessary to achieve your goal?
Approximately 17% . A significant benefit associated with using a credit card is that your losses are limited to $50 if
the card is lost or stolen. 2. Which of the following methods for calculating interest on an outstanding balance
usually produces the lowest overall interest payment for a stated contract rate? Simple interest method 3. One
difference between a debit card and a credit card is that payments made with a debit card are immediately deducted
from your bank account. 4. Interest on a twelve-month installment loan is to be calculated using the discount
method. If the purchase to be financed is $10,000 and the discount rate is 5%, then your total interest payments are
about $526 Total Payments on discount loan = (amount financed)/(1- discount rate x t) 5. Interest on a twelve-
month installment loan is to be calculated using the discount method. If the purchase to be financed is $10,000 and
the discount rate is 5%, then your monthly payment is about $8776. Interest on a twelve-month installment loan is
to be calculated using the add-on method. If the purchase to be financed is $10,000 and the add-on rate is 5%, then
your total interest payments are about $500 Total payments on add-on loan = amount financed x (1+ add-on rate x
t) 7. Interest on a twelve-month installment loan is to be calculated using the add-on method. If the purchase to be
financed is $10,000 and the add-on rate is 5%, then your monthly payment is about $875 8. The government
requires that the lender provide you with information on this rate. The annual percentage rate 9. If you keep poor
records and write a check for more than you have in your checking account, you need overdraft protection. 10. A
revolving credit account is a(n) open-end account. 12. n infinity card carries the name of the sponsoring
organization. 13. Credit blocking occurs when your line of credit is reduced by the estimated cost of an anticipated
purchase. 14. Under a Chapter 13 bankruptcy you arrange wage earner plan with your creditors. 15. You can
increase your credit score if you successfully manage several types of credit. 16. You can stretch out the
repayments on your student loans if you arrange a loan consolidation 17. When your credit line is reduced by an
anticipated purchase this is known as credit blocking. 18. Given a lost or stolen card your potential losses with a
debit card are greater than with a credit card. 19. Which of the following statements is not true? The credit bureau
determines who will receive credit. 20. Under the simple interest method, interest is based on the outstanding loan
balance.