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110. You borrow $3,500 and will pay back the entire amount in 5 years. You are charged 9
percent interest per year. How much interest do you pay on this loan?
111. You borrow $10,000 and will pay back the entire amount in 10 years. You are charged 6
percent interest per year. How much interest do you pay on this loan?
112. Your firm receives an offer from the supplier who provides computer chips used to
manufacture cell phones. Due to poor planning, the supplier has an excess amount of chips and
is willing to sell $600,000 worth of chips for only $500,000. You already have two years' supply on
hand. It would cost you $7,500 today to store the chips until your firm needs them in two years.
What implied interest rate would you be earning if you purchased and store the chips?
113. You are considering an investment that is expected to pay 5 percent in year 1, 7 percent
in years 2 and 3 and 9 percent in year 4. If you invest $2,000 today, what will this investment be
worth at the end of the fourth year?
114. You are considering an investment that is expected to pay 3 percent in year 1, 5 percent
in years 2 and 3 and 7 percent in year 4. If you invest $1,000 today, what will this investment be
worth at the end of the fourth year?
115. We call the process of earning interest on both the original deposit and on the earlier
interest payments:
116. When your investment compounds, your money will grow in a(n) __________ fashion.
117. You invested $1,000 for 5 years in an account that earns 5 percent. However, today you
learn that you are able to move the account into an investment that earns 10 percent. Which of
the following statements is correct?
118. Which of the following statements is incorrect with respect to time lines?
119. Which of the following will not increase a present value?
120. Suppose a U.S. Treasury bond promises to pay $9,780.13 in three years. If bonds of this
type are generating a 4 percent annual return, how much would you pay for this bond today?
121. A firm's net income last year was $2.65 million. Its net income grew 8 percent during the
last 5 years. If that growth rate continues, how long will it take for the firm's net income to
double?
122. A firm's net income last year was $1.5 million. Its net income grew 5 percent during the
last 5 years. If that growth rate continues, how long will it take for the firm's net income to
double?
123. You want to retire in 25 years and you have just inherited $300,000. You believe you will
need $1,450,000 upon retirement. What rate will you need to earn on the account to achieve this
goal?
124. You want to retire in 40 years and you have $40,000 saved in your retirement account.
You believe you will need $1,500,000 upon retirement. What rate will you need to earn on the
account to achieve this goal?
125. Which of the following investments would you prefer?
126. Which of the following is the equivalent of $300 received today?
127. A $400 investment has doubled to $800 in six years because of a 12.25 percent return.
How much longer will it take for the investment to reach $1100 if it continues to earn 12.25
percent?
128. A $1,000 investment has doubled to $2,000 in seven years. How much longer will it take
for the investment to reach $5,000 if it continues to earn the same rate?
129. A $5,000 investment has doubled to $10,000 in ten years. How much longer will it take for
the investment to reach $15,000 if it continues to earn the same rate?
130. Which of the following would you prefer?
131. Which of the following would you prefer?
