70. JG Asset Services is recommending that you invest $1,500 in a 5-year certificate of deposit (CD) that
pays 3.5% interest, compounded annually. How much will you have when the CD matures?
a.
$1,781.53
b.
$1,870.61
c.
$1,964.14
d.
$2,062.34
e.
$2,165.46
71. Your bank offers a 10-year certificate of deposit (CD) that pays 6.5% interest, compounded annually.
If you invest $2,000 in the CD, how much will you have when it matures?
a.
$3,754.27
b.
$3,941.99
c.
$4,139.09
d.
$4,346.04
e.
$4,563.34
72. Cyberhost Corporation’s sales were $225 million last year. If sales grow at 6% per year, how large (in
millions) will they be 5 years later?
a.
$271.74
b.
$286.05
c.
$301.10
d.
$316.16
e.
$331.96
73. Cochrane Associate’s net sales last year were $525 million. If sales grow at 7.5% per year, how large
(in millions) will they be 8 years later?
a.
$845.03
b.
$889.51
c.
$936.33
d.
$983.14
e.
$1,032.30
74. How much would $1, growing at 3.5% per year, be worth after 75 years?
a.
$12.54
b.
$13.20
c.
$13.86
d.
$14.55
e.
$15.28
75. How much would $100, growing at 5% per year, be worth after 75 years?
a.
$3,689.11
b.
$3,883.27
c.
$4,077.43
d.
$4,281.30
e.
$4,495.37
76. Your bank offers a savings account that pays 3.5% interest, compounded annually. If you invest
$1,000 in the account, then how much will it be worth at the end of 25 years?
a.
$2,245.08
b.
$2,363.24
c.
$2,481.41
d.
$2,605.48
e.
$2,735.75
77. Your bank offers a savings account that pays 3.5% interest, compounded annually. How much will
$500 invested today be worth at the end of 25 years?
a.
$1,122.54
b.
$1,181.62
c.
$1,240.70
d.
$1,302.74
e.
$1,367.88
78. Suppose a State of North Carolina bond will pay $1,000 ten years from now. If the going interest rate
on these 10-year bonds is 5.5%, how much is the bond worth today?
a.
$585.43
b.
$614.70
c.
$645.44
d.
$677.71
e.
$711.59
79. Suppose a State of New Mexico bond will pay $1,000 eight years from now. If the going interest rate
on these 8-year bonds is 5.5%, how much is the bond worth today?
a.
$651.60
b.
$684.18
c.
$718.39
d.
$754.31
e.
$792.02
80. How much would $20,000 due in 50 years be worth today if the discount rate were 7.5%?
a.
$438.03
b.
$461.08
c.
$485.35
d.
$510.89
e.
$537.78
81. You expect to receive $5,000 in 25 years. How much is it worth today if the discount rate is 5.5%?
a.
$1,067.95
b.
$1,124.16
c.
$1,183.33
d.
$1,245.61
e.
$1,311.17
82. The going rate of interest on a 5-year treasury bond is 4.25%. You have one that will pay $2,500 five
years from now. How much is the bond worth today?
a.
$1,928.78
b.
$2,030.30
c.
$2,131.81
d.
$2,238.40
e.
$2,350.32
83. Suppose a Google.com bond will pay $4,500 ten years from now. If the going interest rate on safe 10-
year bonds is 4.25%, how much is the bond worth today?
a.
$2,819.52
b.
$2,967.92
c.
$3,116.31
d.
$3,272.13
e.
$3,435.74
84. You have just purchased a U.S. Treasury bond for $747.25. No payments will be made until the bond
matures 5 years from now, at which time it will be redeemed for $1,000. What interest rate will you
earn on this bond?
a.
4.37%
b.
4.86%
c.
5.40%
d.
6.00%
e.
6.60%
85. You have purchased a U.S. Treasury bond for $3,000. No payments will be made until the bond
matures 10 years from now, at which time it will be redeemed for $5,000. What interest rate will you
earn on this bond?
a.
3.82%
b.
4.25%
c.
4.72%
d.
5.24%
e.
5.77%
86. Ten years ago, Kronan Corporation earned $0.50 per share. Its earnings this year were $2.20. What
was the growth rate in earnings per share (EPS) over the 10-year period?
a.
15.17%
b.
15.97%
c.
16.77%
d.
17.61%
e.
18.49%
87. Wildwoods, Inc. earned $1.50 per share five years ago. Its earnings this year were $3.20. What was the
growth rate in earnings per share (EPS) over the 5-year period?
a.
15.54%
b.
16.36%
c.
17.18%
d.
18.04%
e.
18.94%
88. You have $5,000 invested in a bank that pays 3.8% annually. How long will it take for your funds to
triple?
a.
23.99
b.
25.26
c.
26.58
d.
27.98
e.
29.46
89. Your bank pays 4% interest annually. You have $2,500 invested in the bank. How long will it take for
your funds to double?
a.
14.39
b.
15.15
c.
15.95
d.
16.79
e.
17.67
90. Brockman Corporation’s earnings per share were $3.50 last year, and its growth rate during the prior 5
years was 9.0% per year. If that growth rate were maintained, how many years would it take for
Brockman’s EPS to triple?
a.
9.29
b.
10.33
c.
11.47
d.
12.75
e.
14.02
91. Your investment account pays 8.0%, compounded annually. If you invest $5,000 today, how many
years will it take for your investment to grow to $9,140.20?
a.
5.14
b.
5.71
c.
6.35
d.
7.05
e.
7.84
92. Your investment advisor has recommended your invest in bonds that pay 6.0%, compounded annually.
If you invest $10,000 today, how many years will it take for your investment to grow to $30,000?
a.
12.37
b.
13.74
c.
15.27
d.
16.97
e.
18.85
93. You are hoping to buy a new boat 3 years from now, and you plan to save $4,200 per year, beginning
one year from today. You will deposit your savings in an account that pays 5.2% interest. How much
will you have just after you make the 3rd deposit, 3 years from now?
a.
$11,973
b.
$12,603
c.
$13,267
d.
$13,930
e.
$14,626
94. You want to buy new kitchen appliances 2 years from now, and you plan to save $8,200 per year,
beginning one year from today. You will deposit your savings in an account that pays 6.2% interest.
How much will you have just after you make the 2nd deposit, 2 years from now?
a.
$15,260
b.
$16,063
c.
$16,908
d.
$17,754
e.
$18,642
95. You would like to travel in South America 5 years from now, and you can save $3,100 per year,
beginning one year from today. You plan to deposit the funds in a mutual fund that you think will
return 8.5% per year. Under these conditions, how much would you have just after you make the 5th
deposit, 5 years from now?
a.
$18,369
b.
$19,287
c.
$20,251
d.
$21,264
e.
$22,327
96. You want to purchase a motorcycle 4 years from now, and you plan to save $3,500 per year, beginning
immediately. You will make 4 deposits in an account that pays 5.7% interest. Under these
assumptions, how much will you have 4 years from today?
a.
$16,112
b.
$16,918
c.
$17,763
d.
$18,652
e.
$19,584
97. You want to open a sushi bar 3 years from now, and you plan to save $7,000 per year, beginning
immediately. You will make 3 deposits in an account that pays 5.2% interest. Under these
assumptions, how much will you have 3 years from today?
a.
$20,993
b.
$22,098
c.
$23,261
d.
$24,424
e.
$25,645
98. What is the PV of an ordinary annuity with 10 payments of $2,700 if the appropriate interest rate is
5.5%?
a.
$16,576
b.
$17,449
c.
$18,367
d.
$19,334
e.
$20,352
99. What is the PV of an ordinary annuity with 5 payments of $4,700 if the appropriate interest rate is
4.5%?
a.
$16,806
b.
$17,690
c.
$18,621
d.
$19,601
e.
$20,633
100. Your friend offers to pay you an annuity of $2,500 at the end of each year for 3 years in return for cash
today. You could earn 5.5% on your money in other investments with equal risk. What is the most you
should pay for the annuity?
a.
$5,493.71
b.
$5,782.85
c.
$6,087.21
d.
$6,407.59
e.
$6,744.83
101. After receiving a reward for information leading to the arrest of a notorious criminal, you are
considering investing it in an annuity that pays $5,000 at the end of each year for 20 years. You could
earn 5% on your money in other investments with equal risk. What is the most you should pay for the
annuity?
a.
$50,753
b.
$53,424
c.
$56,236
d.
$59,195
e.
$62,311
102. An uncle of yours who is about to retire wants to sell some of his stock and buy an annuity that will
provide him with income of $50,000 per year for 30 years, beginning a year from today. The going
rate on such annuities is 7.25%. How much would it cost him to buy such an annuity today?
a.
$574,924
b.
$605,183
c.
$635,442
d.
$667,214
e.
$700,575
103. What is the PV of an annuity due with 5 payments of $2,500 at an interest rate of 5.5%?
a.
$11,262.88
b.
$11,826.02
c.
$12,417.32
d.
$13,038.19
e.
$13,690.10
104. What’s the present value of a perpetuity that pays $250 per year if the appropriate interest rate is 5%?
a.
$4,750
b.
$5,000
c.
$5,250
d.
$5,513
e.
$5,788
105. A perpetuity pays $85 per year and costs $950. What is the rate of return?
a.
8.95%
b.
9.39%
c.
9.86%
d.
10.36%
e.
10.88%
106. A new investment opportunity for you is an annuity that pays $550 at the beginning of each year for 3
years. You could earn 5.5% on your money in other investments with equal risk. What is the most you
should pay for the annuity?
a.
$1,412.84
b.
$1,487.20
c.
$1,565.48
d.
$1,643.75
e.
$1,725.94
107. Your father is considering purchasing an annuity that pays $5,000 at the beginning of each year for 5
years. He could earn 4.5% on his money in other investments with equal risk. What is the most he
should pay for the annuity?
a.
20,701
b.
$21,791
c.
$22,938
d.
$24,085
e.
$25,289
108. Because your mother is about to retire, she wants to buy an annuity that will provide her with $75,000
of income a year for 20 years, with the first payment coming immediately. The going rate on such
annuities is 5.25%. How much would it cost her to buy the annuity today?
a.
$825,835
b.
$869,300
c.
$915,052
d.
$963,213
e.
$1,011,374
109. Now that your uncle has decided to retire, he wants to buy an annuity that will provide him with
$85,000 of income a year for 25 years, with the first payment coming immediately. The going rate on
such annuities is 5.15%. How much would it cost him to buy the annuity today?
a.
$1,063,968
b.
$1,119,966
c.
$1,178,912
d.
$1,240,960
e.
$1,303,008
110. A salt mine you inherited will pay you $25,000 per year for 25 years, with the first payment being
made today. If you think a fair return on the mine is 7.5%, how much should you ask for it if you
decide to sell it?
a.
$284,595
b.
$299,574
c.
$314,553
d.
$330,281
e.
$346,795
111. Geraldine was injured in a car accident, and the insurance company has offered her the choice of
$25,000 per year for 15 years, with the first payment being made today, or a lump sum. If a fair return
is 7.5%, how large must the lump sum be to leave her as well off financially as with the annuity?
a.
$225,367
b.
$237,229
c.
$249,090
d.
$261,545
e.
$274,622
112. What’s the present value of a 4-year ordinary annuity of $2,250 per year plus an additional $3,000 at
the end of Year 4 if the interest rate is 5%?
a.
$8,509
b.
$8,957
c.
$9,428
d.
$9,924
e.
$10,446
113. Suppose you earned a $275,000 bonus this year and invested it at 8.25% per year. How much could
you withdraw at the end of each of the next 20 years?
a.
$28,532
b.
$29,959
c.
$31,457
d.
$33,030
e.
$34,681
114. Your aunt wants to retire and has $375,000. She expects to live for another 25 years and to earn 7.5%
on her invested funds. How much could she withdraw at the end of each of the next 25 years and end
up with zero in the account?
a.
$28,843.38
b.
$30,361.46
c.
$31,959.43
d.
$33,641.50
e.
$35,323.58
115. Your aunt wants to retire and has $375,000. She expects to live for another 25 years, and she also
expects to earn 7.5% on her invested funds. How much could she withdraw at the beginning of each of
the next 25 years and end up with zero in the account?
a.
$28,243.21
b.
$29,729.70
c.
$31,294.42
d.
$32,859.14
e.
$34,502.10
116. You were left $100,000 in a trust fund set up by your grandfather. The fund pays 6.5% interest. You
must spend the money on your college education, and you must withdraw the money in 4 equal
installments, beginning immediately. How much could you withdraw today and at the beginning of
each of the next 3 years and end up with zero in the account?
a.
$24,736
b.
$26,038
c.
$27,409
d.
$28,779
e.
$30,218
117. Suppose you inherited $275,000 and invested it at 8.25% per year. How much could you withdraw at
the beginning of each of the next 20 years?
a.
$22,598.63
b.
$23,788.03
c.
$25,040.03
d.
$26,357.92
e.
$27,675.82
118. Your uncle just won the weekly lottery, receiving $375,000, which he invested at a 7.5% annual rate.
He now has decided to retire, and he wants to withdraw $35,000 at the end of each year, starting at the
end of this year. What is the maximum number of whole payments that can be withdrawn before the
account is exhausted, i.e., before the account balance would become negative? (Hint: Round down to
the nearest whole number.)
a.
22
b.
23
c.
24
d.
25
e.
26