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35) You just received a $5,000 gift from your grandmother which you have decided to save and
then gift to your grandchildren 50 years from now. How much additional money will you gift if
you earn 7.5 percent interest rather than 7 percent interest over the next 50 years?
A) $39,318.09
B) $39,464.79
C) $38,211.16
D) $37,811.99
E) $38,663.60
36) You are depositing $4,500 today at an annual interest rate of 7.2 percent. How much
additional interest will you earn if you leave the money invested for 45 years instead of 40 years?
A) $25,723.08
B) $30,185.14
C) $22,441.56
D) $6,370.69
E) $11,590.93
37) Today, you have two coins each of which is valued at $100. One coin is expected to
appreciate by 5.2 percent annually while the other coin should appreciate by 5.7 percent
annually. What will be the difference in the value of the two coins 50 years from now?
A) $337.43
B) $318.04
C) $191.79
D) $128.32
E) $380.15
38) Your father invested a lump sum 28 years ago at 4.05 percent annual interest. Today, he gave
you the proceeds of that investment, totalling $48,613.24. How much did your father originally
invest?
A) $14,929.47
B) $16,500.00
C) $15,994.70
D) $15,500.00
E) $16,099.45
39) Suppose the first comic book of a classic series was sold in 1954. In 2017, the estimated
price for this comic book was $310,000, which is an annual return of 22 percent. For this to be
true, what was the original price of the comic book in 1954?
A) $1.00
B) $.97
C) $1.33
D) $1.12
E) $1.20
40) Twenty years from now, you want to spend $175,000 for a fancy car. How much must you
deposit as a lump sum today to achieve this goal at an annual interest rate of 6.6 percent?
A) $54,208.16
B) $48,740.95
C) $57,911.08
D) $40,019.82
E) $51,446.60
41) What is the present value of $45,000 to be received 50 years from today if the discount rate
is 8 percent?
A) $959.46
B) $1,147.07
C) $841.41
D) $1,106.18
E) $1,291.06
42) You would like to give your child $100,000 to start a career 25 years from now. How much
money must you set aside today for this purpose if you can earn 7.5 percent on your
investments?
A) $15,388.19
B) $16,397.91
C) $16,817.67
D) $15,911.13
E) $17,488.37
43) You want to have $30,000 saved 5 years from now to buy a house. How much less do you
have to deposit today to reach this goal if you can earn 3.5 percent rather than 2.5 percent on
your savings? Today's deposit is the only deposit you will make to this savings account.
A) $1,256.43
B) $891.18
C) $1,124.60
D) $945.11
E) $1,219.02
44) Your older sister deposited $2,500 today at 6.5 percent interest for 15 years. However, you
can only earn 6.25 percent interest. How much more money must you deposit today than your
sister did if you are to have the same amount saved at the end of the 15 years?
A) $92.19
B) $89.70
C) $88.78
D) $90.21
E) $93.39
45) Duane and Thad plan on retiring 27 years from today and plan to have the same amount
saved at that time. In preparation for this, Duane is depositing $15,000 today at an annual interest
rate of 5.2 percent. How will Thad's deposit amount vary from Duane's if Thad also makes a
deposit today but earns an annual interest rate of 6.2 percent?
A) $4,118.42 more
B) $4,333.33 less
C) $3,417.09 more
D) $4,274.12 less
E) $3,381.39 less
46) When you retire 45 years from now, you want to have $1.25 million saved. You think you
can earn an average of 7.6 percent on your investments. To meet your goal, you are trying to
decide whether to deposit a lump sum today, or to wait and deposit a lump sum five years from
today to fund this goal. How much more will you have to deposit if you wait for five years
before making the deposit?
A) $17,414.14
B) $21,319.47
C) $19,891.11
D) $20,468.85
E) $13,406.78
47) Theo wants to have $40,000 for a down payment on a house five years from now. He can
either deposit one lump sum today or he can wait one year and deposit a lump sum. Assume an
annual interest rate of 3.5 percent. How much additional money must he deposit if he waits for
one year rather than making the deposit today?
A) $1,001.98
B) $986.13
C) $1,178.76
D) $948.03
E) $1,020.18
48) Friendly Companies has an unfunded pension liability of $327 million that must be paid in
16 years. What is the present value of this liability at a discount rate of 6.24 percent?
A) $129,803,162.22
B) $111,438,907.11
C) $124,147,723.50
D) $134,519,484.14
E) $121,511,366.67
49) You have just received notification that you have won the $1.25 million first prize in the
Centennial Lottery. However, the prize will be awarded on your 100th birthday, 79 years from
now. The appropriate discount rate is 6.4 percent. What is the present value of your winnings?
A) $11,288.16
B) $9,300.82
C) $10,309.91
D) $8,333.33
E) $10,500.00
50) One year ago, you invested $1,750. Today it is worth $1,815.48. What rate of interest did
you earn?
A) 3.59 percent
B) 4.33 percent
C) 3.88 percent
D) 3.74 percent
E) 4.01 percent
51) According to the Rule of 72, you can do which one of the following?
A) Approximately double your money in five years at 7.24 percent interest
B) Double your money in 7.2 years at 8 percent interest
C) Approximately double your money in 11 years at 6.55 percent interest
D) Triple your money in 7.2 years at 7.2 percent interest
E) Approximately triple your money in 7.2 years at 10 percent interest
52) Sixty years ago, your mother invested $4,500. Today, that investment is worth $430,065.11.
What is the average annual rate of return she earned on this investment?
A) 6.67 percent
B) 11.71 percent
C) 7.90 percent
D) 10.40 percent
E) 12.02 percent
53) Four years ago, Saul invested $500. Three years ago, Trek invested $600. Today, these two
investments are each worth $800. Assume each account continues to earn its respective rate of
return. Which one of the following statements is correct concerning these investments?
A) Three years from today, Trek's investment will be worth more than Saul's.
B) One year ago, Saul's investment was worth less than Trek's investment.
C) Trek earns a higher rate of return than Saul.
D) Trek has earned an average annual interest rate of 9.86 percent.
E) Saul has earned an average annual interest rate of 12.64 percent.
54) Towne Station is saving money to build a new loading platform. Three years ago, they set
aside $23,000 for this purpose. Today, that account is worth $31,406. What rate of interest is
Towne Station earning on this investment?
A) 8.39 percent
B) 9.47 percent
C) 10.94 percent
D) 8.23 percent
E) 9.01 percent
55) Ten years ago, Jackson Supply set aside $125,000 in case of a financial emergency. Today,
that account has increased in value to $278,592. What rate of interest is the firm earning on this
money?
A) 8.80 percent
B) 8.34 percent
C) 7.75 percent
D) 8.01 percent
E) 7.87 percent
56) Twelve years ago, your parents set aside $8,000 to help fund your college education. Today,
that fund is valued at $23,902. What rate of interest is being earned on this account?
A) 8.99 percent
B) 9.42 percent
C) 9.67 percent
D) 9.55 percent
E) 9.06 percent
57) Some time ago, Tracie purchased two acres of land costing $67,900. Today, that land is
valued at $64,800. How long has she owned this land if the price of the land has been decreasing
by 1.5 percent per year?
A) 3.33 years
B) 2.48 years
C) 3.09 years
D) 2.97 years
E) 2.08 years
58) On your tenth birthday, you received $300 which you invested at 4.5 percent interest,
compounded annually. Your investment is now worth $756. How old are you today?
A) Age 20
B) Age 31
C) Age 30
D) Age 23
E) Age 21
59) Assume the total cost of a college education will be $245,000 when your child enters college
in 15 years. You presently have $108,000 to invest for this purpose. What rate of interest must
you earn to cover the cost of your child's college education?
A) 5.79 percent
B) 5.50 percent
C) 5.61 percent
D) 6.25 percent
E) 6.81 percent
60) At 5 percent interest, how long would it take to triple your money?
A) 26.55 years
B) 25.64 years
C) 24.87 years
D) 22.52 years
E) 20.01 years
61) Assume the average vehicle selling price in the United States last year was $36,420. The
average price five years earlier was $31,208. What was the annual increase in the selling price
over this time period?
A) 1.67 percent
B) 3.14 percent
C) 2.56 percent
D) 3.01 percent
E) 2.89 percent
62) You're trying to save to buy a new $68,000 sports car. Currently, you have saved $36,840
which is invested at 4.9 percent annual interest. How many years will it be before you purchase
the car, assuming the price of the car remains constant?
A) 9.67 years
B) 17.18 years
C) 12.81 years
D) 16.91 years
E) 10.84 years
63) In 1903, the winner of a competition was paid $50. In 2017, the winner's prize was $235,000.
What will the winner's prize be in 2040 if the prize continues increasing at the same rate? (Do
not round intermediate calculations. Round your answer to the nearest $500.)
A) $1,080,000
B) $1,176,500
C) $1,250,000
D) $1,294,000
E) $1,188,500
64) You will receive $4,000 at graduation 3 years from now. You plan on investing this money
at 5 percent annual interest until you have accumulated $50,000. How many years from today
will it be when this occurs?
A) 51.42 years
B) 49.08 years
C) 54.77 years
D) 48.42 years
E) 51.77 years
