WorksheetsL10: Compound interest application
Total questions: 10
Worksheet time: 25mins
Sean invests $2000 at 6% compounded quarterly for three years. Find the amount of the investment at the end of three years.
a) $2382
b) $2091
c) $2370
d) $2391
A non-interest bearing promissory note has a face value of $950. Find the proceeds of this note if it is discounted 3½ years before its maturity date at 8% compounded quarterly.
a) $719.98
b) $771.65
c) $725.67
d) $657.22
A payment of $1500 is due in three months. Find the equivalent value at nine months if the interest rate is 4% compounded quarterly.
a) $1500
b) $1530
c) $1560
d) $1470
How many years will it take $1.00 to triple to $3.00 at an annual rate of 5%.
a) 28.5 years
b) 22.5 years
c) 61.49 years
d) 70 years
What is the quarterly compounded rate if $1300 accumulates to $1564 in 3 years?
a. 6.2%
b. 25.4%
c. 1.6%
d. 6.8%
Effective rate is
Always the same as the periodic rate
Decreases with increasing compounding frequency in the nominal rate
Increases with increasing compounding frequency in the nominal rate
Does not depend on the compounding in the nominal rate
The effective annual rate for 6.4% compounded quarterly is:
a) 6.4%
b) 6.56%
c) 6.54%
d) 6.5%
If the effective rate of interest on an investment is 4.8%, what is the nominal rate of interest compounded quarterly?
4.54%
4.72%
1.20%
5.23%
Equivalent rates
Are rates that have the same value
Are rates that have the same compounding frequency
Are rates that produce the same future values over the same period of time
Are rates that have annual compounding
Find the nominal rate of interest compounded quarterly equivalent to 12.3% compounded monthly.
3.1%
12.4%
7.7%
12.8%
