FIN 370 Week 2 Practice: Week 2 Knowledge Check

Complete the Week 2 “Knowledge Check” in Connect®.

Note: You have unlimited attempts available to complete this practice assignment. The highest scored attempt will be recorded. These assignments have earlier due dates, so plan accordingly. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after your due date.

Materials

Learn: McGraw-Hill Connect® Access

MC Qu. 4-16 What is the future value of…

What is the future value of $1,000 deposited for one year earning 5 percent interest rate annually?

Multiple Choice

$1,005

$1,000

$2,050

$1,050

MC Qu. 4-5 We call the process of earning…

We call the process of earning interest on both the original deposit and on the earlier interest payments

Multiple Choice

discounting.

computing.

multiplying.

compounding.

MC Qu. 4-71 A deposit of $500 earns 5…

A deposit of $500 earns 5 percent the first year, 6 percent the second year, and 7 percent the third year. What would be the third year future value?

Multiple Choice

$595.46

$634.91

$671.02

$615.62

MC Qu. 4-9 With regard to money deposited in…

With regard to money deposited in a bank, future values are

Multiple Choice

smaller than present values.

are completely independent of present values.

equal to present values.

larger than present values.

MC Qu. 4-17 What is the future value of…

What is the future value of $2,000 deposited for one year earning 6 percent interest rate annually?

Multiple Choice

$4,120

$2.000

$120

$2,120

MC Qu. 4-10 A dollar paid (or received) in…

A dollar paid (or received) in the future is

Multiple Choice

not comparable to a dollar paid (or received) today.

worth as much as a dollar paid (or received) today.

worth more than a dollar paid (or received) today.

not worth as much as a dollar paid (or received) today.

MC Qu. 4-29 Approximately how many years does it…

Approximately how many years does it take to double a $300 investment when interest rates are 8 percent per year?

Multiple Choice

9 years

11 years

4.17 years

0.11 years

MC Qu. 4-7 The interest rate, i, which we…

The interest rate, i, which we use to calculate present value, is often referred to as the

Multiple Choice

compound rate.

dividend.

multiplier.

discount rate.

MC Qu. 4-73 What is the present value of…

What is the present value of a $600 payment in one year when the discount rate is 8 percent?

Multiple Choice

$525.87

$575.09

$555.56

$498.61

MC Qu. 4-78 Approximately what rate is needed to…

Approximately what rate is needed to double an investment over five years?

Multiple Choice

12.2 percent

8 percent

15.8 percent

14.4 percent

MC Qu. 4-79 Determine the interest rate earned on…

Determine the interest rate earned on an $800 deposit when $808 is paid back in one year.

Multiple Choice

100 percent

15 percent

10 percent

1 percent

MC Qu. 4-109 You double your money in 5…

You double your money in five years. The reason your return is not 20 percent per year is because:

Multiple Choice

it is probably a “fad” investment.

it does not reflect the effect of the Rule of 72.

it does not reflect the effect of compounding.

it does not reflect the effect of discounting.

MC Qu. 5-146 Which of the following will increase…

Which of the following will increase the future value of an annuity?

Multiple Choice

The number of periods increases.

The amount of the annuity increases.

The interest rate increases.

All of these choices are .

MC Qu. 5-22 What is the future value of…

What is the future value of a $1,000 annuity payment over 4 years if the interest rates are 8 percent?

Multiple Choice

$4,506.11

$9,214.20

$4,320.00

$3,312.10

MC Qu. 5-74 If the present value of an…

If the present value of an ordinary, 8-year annuity is $12,500 and interest rates are 9.1 percent, what is the present value of the same annuity due?

Multiple Choice

$14,114.80

$14,211.90

$13,941.90

$13,637.50

MC Qu. 5-147 Which of the following will increase…

Which of the following will increase the present value of an annuity?

Multiple Choice

The effective rate is calculated over fewer years.

The amortization schedule decreases.

The interest rate decreases.

The number of periods decreases.

MC Qu. 5-30 If the future value of an…

If the future value of an ordinary, 7-year annuity is $10,000 and interest rates are 4 percent, what is the future value of the same annuity due?

Multiple Choice

$10,700.00

$10,000.00

$10,400.00

$9,615.38

MC Qu. 5-31 If the future value of an…

If the future value of an ordinary, 4-year annuity is $1,000 and interest rates are 6 percent, what is the future value of the same annuity due?

Multiple Choice

$943.40

$1,000.00

$1,040.00

$1,060.00

MC Qu. 5-33 A loan is offered with monthly…

A loan is offered with monthly payments and a 6.5 percent APR. What is the loan’s effective annual rate (EAR)?

Multiple Choice

5.69 percent

12.63 percent

7.28 percent

6.697 percent

MC Qu. 5-15 People refinance their home…

People refinance their home mortgages

Multiple Choice

when rates fall and rise.

whenever they need to, independent of rates.

when rates fall.

when rates rise.

Complete the Week 2 “Knowledge Check” in Connect®.

Note: You have unlimited attempts available to complete this practice assignment. The highest scored attempt will be recorded. These assignments have earlier due dates, so plan accordingly. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after your due date.

Materials

Learn: McGraw-Hill Connect® Access

MC Qu. 4-16 What is the future value of…

What is the future value of $1,000 deposited for one year earning 5 percent interest rate annually?

Multiple Choice

$1,005

$1,000

$2,050

$1,050

MC Qu. 4-5 We call the process of earning…

We call the process of earning interest on both the original deposit and on the earlier interest payments

Multiple Choice

discounting.

computing.

multiplying.

compounding.

MC Qu. 4-71 A deposit of $500 earns 5…

A deposit of $500 earns 5 percent the first year, 6 percent the second year, and 7 percent the third year. What would be the third year future value?

Multiple Choice

$595.46

$634.91

$671.02

$615.62

MC Qu. 4-9 With regard to money deposited in…

With regard to money deposited in a bank, future values are

Multiple Choice

smaller than present values.

are completely independent of present values.

equal to present values.

larger than present values.

MC Qu. 4-17 What is the future value of…

What is the future value of $2,000 deposited for one year earning 6 percent interest rate annually?

Multiple Choice

$4,120

$2.000

$120

$2,120

MC Qu. 4-10 A dollar paid (or received) in…

A dollar paid (or received) in the future is

Multiple Choice

not comparable to a dollar paid (or received) today.

worth as much as a dollar paid (or received) today.

worth more than a dollar paid (or received) today.

not worth as much as a dollar paid (or received) today.

MC Qu. 4-29 Approximately how many years does it…

Approximately how many years does it take to double a $300 investment when interest rates are 8 percent per year?

Multiple Choice

9 years

11 years

4.17 years

0.11 years

MC Qu. 4-7 The interest rate, i, which we…

The interest rate, i, which we use to calculate present value, is often referred to as the

Multiple Choice

compound rate.

dividend.

multiplier.

discount rate.

MC Qu. 4-73 What is the present value of…

What is the present value of a $600 payment in one year when the discount rate is 8 percent?

Multiple Choice

$525.87

$575.09

$555.56

$498.61

MC Qu. 4-78 Approximately what rate is needed to…

Approximately what rate is needed to double an investment over five years?

Multiple Choice

12.2 percent

8 percent

15.8 percent

14.4 percent

MC Qu. 4-79 Determine the interest rate earned on…

Determine the interest rate earned on an $800 deposit when $808 is paid back in one year.

Multiple Choice

100 percent

15 percent

10 percent

1 percent

MC Qu. 4-109 You double your money in 5…

You double your money in five years. The reason your return is not 20 percent per year is because:

Multiple Choice

it is probably a “fad” investment.

it does not reflect the effect of the Rule of 72.

it does not reflect the effect of compounding.

it does not reflect the effect of discounting.

MC Qu. 5-146 Which of the following will increase…

Which of the following will increase the future value of an annuity?

Multiple Choice

The number of periods increases.

The amount of the annuity increases.

The interest rate increases.

All of these choices are .

MC Qu. 5-22 What is the future value of…

What is the future value of a $1,000 annuity payment over 4 years if the interest rates are 8 percent?

Multiple Choice

$4,506.11

$9,214.20

$4,320.00

$3,312.10

MC Qu. 5-74 If the present value of an…

If the present value of an ordinary, 8-year annuity is $12,500 and interest rates are 9.1 percent, what is the present value of the same annuity due?

Multiple Choice

$14,114.80

$14,211.90

$13,941.90

$13,637.50

MC Qu. 5-147 Which of the following will increase…

Which of the following will increase the present value of an annuity?

Multiple Choice

The effective rate is calculated over fewer years.

The amortization schedule decreases.

The interest rate decreases.

The number of periods decreases.

MC Qu. 5-30 If the future value of an…

If the future value of an ordinary, 7-year annuity is $10,000 and interest rates are 4 percent, what is the future value of the same annuity due?

Multiple Choice

$10,700.00

$10,000.00

$10,400.00

$9,615.38

MC Qu. 5-31 If the future value of an…

If the future value of an ordinary, 4-year annuity is $1,000 and interest rates are 6 percent, what is the future value of the same annuity due?

Multiple Choice

$943.40

$1,000.00

$1,040.00

$1,060.00

MC Qu. 5-33 A loan is offered with monthly…

A loan is offered with monthly payments and a 6.5 percent APR. What is the loan’s effective annual rate (EAR)?

Multiple Choice

5.69 percent

12.63 percent

7.28 percent

6.697 percent

MC Qu. 5-15 People refinance their home…

People refinance their home mortgages

Multiple Choice

when rates fall and rise.

whenever they need to, independent of rates.

when rates fall.

when rates rise.