1. Peter wants to buy a tablet computer with a cost of $1,200. If Peter has $950 invested today, and the annual interest rate is 6.5%, how long will Peter have to wait before he has enough money to buy the tablet computer?
a. 1 year and 3 months
b. 2 years and 6 months
c. 3 years and 1 month
d. 3 years and 7 months
e. 3 years and 9 months
2. The National Bank of Wynona offers two types of savings account. The Top-Up-N-Saver account pays 2.5% annual compound interest, whereas the Super-Saver account pays 3% annual simple interest. If we put in $1,000 now and leave the money in the bank account for 10 years, which account would pay the most interest (and how much more)?
a. The Top-Up-N-Saver account would pay $19.92 more in interest.
b. The Top-Up-N-Saver account would pay $50 more in interest.
c. The Super-Saver account would pay $50 more in interest.
d. The Super-Saver account would pay $19.92 more in interest.
e. Both accounts would pay the same interest.
3. You are in the process of budgeting for your university education. You estimate that you will need about $50,000 to go back to university after 3 years. You have already saved $35,000. You want to invest this money for the next 3 years, and then use the future proceeds to finance your university education. What is the minimum annual rate of return you must obtain on your investment to achieve your goal?
a. 23.33%
b. 16.72%
c. 12.62%
d. 11.89%
e. 10.00%