Financial Mathematics

What is the formula for calculating simple interest?

• I = P / R * T

• The formula for calculating simple interest is: I = PRT, where I is the interest, P is the principal amount, R is the rate of interest, and T is the time period.

• I = P * R + T

• I = P + R + T

Calculate the simple interest on a principal amount of $2000 at an interest rate of 5% per annum for 3 years.

• The simple interest is $1000

• The simple interest is $150

• The simple interest is $500

• The simple interest is $300

Determine the compound interest on a principal amount of $5000 at an interest rate of 8% per annum compounded annually for 5 years.

• The compound interest is $1500.00.

• The compound interest is $4000.00.

• The compound interest is $2210.04.

• The compound interest is $3000.00.

What is the formula for determining the future value of an investment?

• FV = PV * (1 - r)^n

• FV = PV * (1 + r)^n

• FV = PV / (1 + r)^n

• FV = PV + (1 + r)^n

Calculate the future value of an investment of $1000 at an interest rate of 6% per annum for 8 years.

• The future value of the investment is $1000.

• The future value of the investment is $1200.

• The future value of the investment is $1338.23.

• The future value of the investment is $1500.

What is the formula for determining the present value of a future amount?

• PV = FV / (1 + r)^n

• PV = FV * (1 + r)^n

• PV = FV * (1 - r)^n

• PV = FV + (1 + r)^n

Determine the present value of $5000 to be received after 3 years, assuming an interest rate of 4% per annum.

• The present value of $5000 to be received after 3 years, assuming an interest rate of 4% per annum, is $6000.

• The present value of $5000 to be received after 3 years, assuming an interest rate of 4% per annum, is approximately $4,579.61.

• The present value of $5000 to be received after 3 years, assuming an interest rate of 4% per annum, is $5000.

• The present value of $5000 to be received after 3 years, assuming an interest rate of 4% per annum, is $4500.

Explain the difference between simple annuity and general annuity.

• The main difference is that a simple annuity involves regular payments for a specific period, while a general annuity involves payments that can vary in frequency and amount.

• Simple annuity is a type of investment, while general annuity is a type of insurance.

• Simple annuity is for individuals, while general annuity is for businesses.

• The main difference is that a simple annuity involves irregular payments, while a general annuity involves regular payments.

Calculate the future value of a simple annuity with annual payments of $1000 for 5 years at an interest rate of 7% per annum.

• The future value of the annuity is $7,500.

• The future value of the annuity is $5,000.

• The future value of the annuity is $6,801.45.

• The future value of the annuity is $10,000.

What is the formula for calculating the maturity value of a general annuity?

• M = P * (1 - r/n)^(nt)

• M = P * (1 + r/n)^(t/n)

• M = P * (1 - r/n)^(t/n)

• The formula for calculating the maturity value of a general annuity is M = P * (1 + r/n)^(nt), where M is the maturity value, P is the principal amount, r is the annual interest rate, n is the number of times that interest is compounded per year, and t is the time the money is invested for in years.