PACE PFL Test Review

How much interest will be earned on $11,500 deposited in a 5% simple interest bearing account for 48 months?

How much interest will be earned on $11,500 deposited in an account that compounds interest annually at a 5% rate for 48 months?

When you were born, your aunt deposited $1,000 in a bank account earning simple interest at a rate of 5% and another $1,000 in a bank account earning compound interest at the same rate. She has made no other deposits or withdrawals and plans to give you all the money in both accounts on your 18th birthday. How much money will you get?

When you were born, your aunt deposited $1,000 in a bank account earning simple interest at a rate of 5% and another $1,000 in a bank account earning compound interest at the same rate. She has made no other deposits or withdrawals and plans to give you all the money in both accounts on your 18th birthday. How much interest did your aunt earn for you from her $2,000 investment?

If you take out a loan to pay for something (college, car, house), the financial institution loaning you the money will calculate a minimum monthly payment you must make to pay the loan back. This monthly payment includes interest. What happens if you pay MORE than the minimum each month?

• You will pay off the loan faster, but will pay the same total amount.

• You will pay off the loan faster and you will pay less total interest.

• It will take you longer to pay off the loan, but you will pay the same total amount.

• It will take you longer to pay off the loan and you will pay more interest.

If you take out a loan, will a higher interest rate reduce or increase the total amount of repayment (the money you pay back)?

• Reduce

• Increase

• Neither; you will always pay back the exact same amount you borrow.

The out-of-state university you choose to attend is going to cost $25,000 per year. You have received a scholarship for $7500, and your parents and grandparents each offered to pay 25% of the remaining cost. You got a job to help you pay for the rest. If you save for 2 years, how much money per month do you need to save to cover the first year at the university?

• $364.58

• $8,750

• $4,375

• $25,000

Which type of financial aid for college do you have to pay back for more money than what you borrowed?

• Scholarship

• Grant

• Student Loan

• All of them.

Which type of financial aid for college do you NOT have to pay back?

• Scholarship

• Grant

• Work-Study Program

• All of them.

Which type of financial aid for college do you NOT have to pay back, but it does require a time investment from you?

• Scholarship

• Grant

• Work-Study Program

• All of them.