WorksheetsChapter 10 - Grow Your Green
Total questions: 21
Worksheet time: 42mins
There are four common Time Value of Money calculations that can be used to reach long-term financial goals.
True
False
There are many technology resources available to help calculate and see the effect of interest on the growth of money over time.
True
False
Given an initial investment with the same interest rate and time frame, simple interest will earn more money than compound interest.
True
False
Most interest earning accounts use simple interest.
True
False
One third of US households between the ages of 30 and 59 will have enough money for retirement by age 70.
True
False
What is NOT a common Time Value of Money calculation?
Future Value of an Annuity
Present Value of a Lump Sum
Future Value of Savings
Future Value of a Lump Sum
What is the average interest rate on a savings account?
.05%
.10%
.29%
.40%
What is the formula to calculate simple interest?
i = p x r x t
i = p – r x t
p = i x r – t
p = r x i x t
What is the key to building wealth?
Start saving after you buy a house
Start saving early in life
Start saving when you begin your first full-time job
Start saving later in life
What formula is used to determine the number of years required to double your money at a given interest rate?
Simple interest formula
Rule of 72
Future Value of a Lump Sum
Present Value of an Annuity
What is a Present Value of an Annuity?
This calculation shows the current value of a stream of payments to be received in the future, given a specified rate of return.
This calculation determines the future value of a single sum of money invested today.
This calculation estimates the total interest earned on an investment over a period of time.
This calculation provides the rate of return required to double an investment in a specified number of years.
What is Compound Interest:
Interest earned on the principal and on the accumulated interest earned over time.
Interest earned only on the principal amount.
Interest that decreases over time.
Interest that is paid only once.
What is a Future Value of a Lump Sum:
This calculation shows how large a single sum of money will become at the end of a specified period of time.
This calculation shows the present value of a future sum of money.
This calculation determines the interest rate needed to reach a future value.
This calculation estimates the time required to double the investment.
14. Time Value of Money (TVM) - A set of calculations that determines the present or future value of a single _________.
amount of money or a stream of cash flows for a time period at a given rate
investment in stocks
piece of real estate
business venture
An annuity is a fixed series of deposits or a fixed series of payments received.
True
False
16. The Rule of 72 is used to estimate the time it takes for an investment to double at a fixed annual rate of interest. What is the Rule of 72?
A method to calculate compound interest
A formula to estimate the doubling time of an investment
A rule for determining inflation rates
A guideline for setting interest rates
The difference between simple interest and compound interest is:
Simple interest is calculated on the principal amount only, while compound interest is calculated on the principal and the accumulated interest.
Simple interest is calculated on the principal and the accumulated interest, while compound interest is calculated on the principal amount only.
Simple interest and compound interest are calculated in the same way.
Simple interest is always higher than compound interest.
What is the difference between the Future Value of a Lump Sum and the Future Value of an Annuity?
The Future Value of a Lump Sum is calculated for a single payment, while the Future Value of an Annuity is calculated for a series of payments.
The Future Value of a Lump Sum is always higher than the Future Value of an Annuity.
The Future Value of an Annuity is calculated for a single payment, while the Future Value of a Lump Sum is calculated for a series of payments.
There is no difference between the Future Value of a Lump Sum and the Future Value of an Annuity.
Why is saving an important part of a financial plan?
To ensure financial security
To increase spending
To avoid budgeting
To reduce income
Using the simple interest formula, how much will you have saved if you invest $3,000 with a 5% interest rate at the end of five years?
$3,750
$3,500
$3,750
$4,000
The rate paid for the use of the money is the ___.
interest rate
time
principal
maturity date
