Econ 103  Review Sheet I
Chapter 4:
1. Determine through calculation, which has a higher present value: An annual payment
of $100 received over 3 years or an annual payment of $50 received 7 years. In
both cases the discount rate is 7% (0.07).
2. To four decimal places what is the monthly interest rate if you are asked to convert a
12 percent annual rate to a monthly rate?
3.Convert each of the following basis points amounts to percents:
a)
412.5
b)
10
c)
125.7
d)
1075
e)
1
4. Using the rule of 72, determine the approximate time it will take $1000 to double given
the following interest rates.
a)
5.5%
b)
10.0%
c)
30.0%
d)
2.0%
e)
4.5%
5.What will be the amount owed at the end of one year if a borrower charges $100 on her
credit card and doesn't make any payments during the year if the interest rate is
1.5% per month?
6.Which investment plan will provide the highest future value: $500 invested at 5 percent
annually for four years and then that balance invested at 7 percent annually for an
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 Spring '08
 Beck
 Calculus, Standard Deviation, Ri, higher present value, percent annual rate

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