Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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 Jessie purchased a used car from a small business. They offered to let him finance or
borrow $3200 for a term of 2 years at 11% a year using Simple Interest.
How much
interest will Jessie have to pay the used car dealer? | | | |
a. | $176 | c. | $387.20 | b. | $352 | d. | $704 |
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2.
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 | Nicole deposited $4400 in a savings account earning 6% compounded monthly. If she makes no
other deposits or withdrawals, how much will she have in her account in two years? | | | |
a. | $4959.50 | c. | $9342.76 | b. | $4928.00 | d. | $9328.00 |
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3.
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The equation for compound interest is  where P is the initial amount invested, r is the interest rate as a decimal, n is the number of times compounded annually, and t is the number of years. Determine the value of the
account if the initial investment is $8,000 compounded monthly at a rate
of 6% after 10 years. a. | $8409.12 | c. | $14,326.78 | b. | $8480.00 | d. | $14,555.17 |
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4.
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 | Jackson deposited $5,000 at 3.8% interest rate, compounded continuously, when he was 18
years old. How much will be in the account when he is 40 years old if he made no other deposits or
withdrawals? | | | |
a. | $10,000 | c. | $11,024.91 | b. | $11,535.60 | d. | $23,650.87 |
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5.
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The equation for compound interest is A = P · e
r t where
P is the initial amount invested, r is the interest rate as a decimal, and t is the number of years.
Determine the value of the
account if the initial investment is $3000 compounded continuously at a rate of 6% after 7
years.
a. | $1260 | c. | $4300.42 | b. | $4260 | d. | $4565.88 |
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6.
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Which investment would be worth the most after 20
years?
a. | An initial investment of $3000 compounded
annually at a rate of 12% after 20 years.
| b. | An initial investment of $3000
compounded quarterly at a rate of 11.9% after 20
years.
| c. | An initial
investment of $3000 compounded continuously at a rate of 11.8% after 20
years.
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7.
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 Ms.
Morrison is purchasing a house and needs to finance a $150,000 mortgage from the bank with an annual
percentage rate (APR) of 3.8%. She is financing it over 30 years and making monthly payments. What is
the monthly payment?
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a. | $416.67 | c. | $833.33 | b. | $698.94 | d. | $1393.88 |
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8.
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 A
family is purchasing a house and needs to finance a $195,000 mortgage from the bank with an annual
percentage rate (APR) of 5.3%. The family is financing it over 30 years and making monthly payments.
What is the total amount the family will pay back to the bank (to the nearest dollar)?
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a. | $195,000 | c. | $389,822 | b. | $328,322 | d. | $447,210 |
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