Question 1. The amount an investment will be worth after one or more periods of time is the _____ value.
future
present
principal
discounted
simple
Question 2. Jeff is going to receive $10,000 five years from now. Tammy is going to receive $10,000 eight years from now. Which one of the following statements is correct if both Tammy and Jeff apply a 6 percent discount rate to these amounts?
The present value of Tammy's and Jeff's money will be equal.
The value of Jeff's money will be less than the value of Tammy's money 15 years from now.
In today's dollars, Jeff's money is worth more than Tammy's.
Ten years from now, the value of Jeff's money will be equal to the value of Tammy's money.
Tammy's money is worth more than Jeff's money given the 6 percent discount rate.
Question 3. Kate invests $3,000 at 9 percent when she is 20 years old. Kurt invests $3,000 at 9 percent when he is 35 years old. Both investments compound interest annually. Both Kate and Kurt retire at age 60. Which one of the following statements is correct?
Kate will have less money when she retires than Kurt.
Kurt will earn more interest on interest than Kate.
Kurt will earn more compound interest than Kate.
If Kurt waits to age 70 to retire, then he will have just as much money as Kate.
Kate will have more money when she retires than Kurt.
Question 4. Frank invests $2,500 in an account that pays 6 percent simple interest. How much money will he have at the end of four years?
$2,650
$3,100
$3,156
$3,163
$10,600
Question 5. Jessica invests $3,000 in an account that pays 5 percent simple interest. How much more could she have earned over a 7-year period if the interest had compounded annually?
$122.20
$129.20
$147.80
$171.30
$221.30