optionals - chap 5

# optionals - chap 5 - Chapter 05 _ 1. Alpha Bank pays...

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Chapter 05 ________ 1. Alpha Bank pays interest of 4 percent compounded annually. Beta Bank pays 4 percent simple interest. Which one of the following statements is true if you invest \$1,000 in each bank for five years? a. Alpha Bank will pay you a total of \$200 in interest over the five years. b. Beta Bank will pay you more interest over the five years than Alpha Bank will. c. Alpha Bank will pay you a total of \$216.65 in simple interest. d. Alpha Bank will pay you \$16.65 of interest on interest. ________ 2. Martha wants to have \$10,000 in her investment account ten years from now. How much does she have to deposit today to achieve her goal if she can earn 8 percent compounded annually? a. \$4,631.93 b. \$4,665.07 c. \$5,259.26 d. \$5,589.25 ________ 3. Jim has \$1,650 saved today. He wants to buy a different vehicle as soon as he has \$3,200 saved. How long does Jim have to wait to get his vehicle if he earns 7.5 percent compounded annually? a. 8.67 years

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## This note was uploaded on 06/27/2008 for the course FINC 450 taught by Professor Ddavidson during the Spring '08 term at Loyola Chicago.

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optionals - chap 5 - Chapter 05 _ 1. Alpha Bank pays...

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