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Unformatted text preview: IT-26PRACTICEMULTIPLECHOICETEST 71.InvestmentXfor100,000isinvestedatanominalrateofinterest,j,convertiblesemiannually.Afterfouryearsit accumulatesto 214,358.88.InvestmentY for100,000isinvestedatanominalrateofdiscount,k,convertiblequarterly.Aftertwoyearsitaccumulatesto 232,305.73.Investment"Zfor100,000is investedat an annualeffectiverateof interestequaltojin year one and .m annualeffectiverate of discountequaltokin yeartwo. Calculatethe valueofinvestmentZat the end of two years .I.;hCi):v-2IT.1J"m))~v-(";')m~(i)~1+,(A)I and ITonly(B)I and ill only(C)ITand ill onl~)(D)I, ITand ill(E)The correctansweris not givenby (A),(B)vEC)or (D)~(f-:53.A fund starts with a zero balanceat time zero.Thefund accumulateswith a varyingforceofinterestOt==-fJ-,fort>O.A depositof100,000is made at time 2. Calculatethe numbert+1of years from the time of depositfor the fundto double..,IIII..,~~(E) 2.50(E)201,675(D)2.00(D)200,000(C)1.50(C)184,425(B)1.00(B)182,900(A)168,000(A) .502.Whichof the followingare true?5.Carlputs10,000intoa bankaccountthatpaysanannualeffectiveinterestrateof 4%forten years.If a withdrawalis made duringthe firstfive and one-half years,a penaltyof 5%of the withdrawalamountis made.Carl withdrawsKat the end of each of years 4, 5, 6 and7.The balancein the accountat the end of year10 is 10,000.CalculateK.4.Two funds, X and Y, start with the same amount.You are given:(E).046(E)1031(D).044(D)1005(C)980(C).042(B)958(B).023-eFundX accumulatesat a forceof interestof 5%.FundY accumulatesat a rateofinterestj,compoundedsemiannually.At the end of eight years, FundX is1.05 times as large as Fund Y.(if(ii)(iii)Calculatej.(A).022(A)929II-276.You are given:(i)Xisthe currentval1.1ea: :he end of year two ofa20-yearannuity-dueof 1 perannum.(ii)The annualeffective:n:e:-es: rate for yeartis 8 ~tCalculateX29(C):LI?1=1029(D):L1f1=]07.Gloriaborrows100,000 to be repaidover 30 years.You are given:(i)Her first paymentisXat the end of year1.(ii)Her paymentsincreaseat the rate of 100 per year for the next19 yearsandremainlevel for the following10 years.(iii)The effectiveannualrate of interestis 5%.CalculateX(A)5505(B)5555(C)5605(D)5655(E)57058.You are given a perpetuitywith annual paymentsas follows:(i)Paymentsof 1 at the end of the first year and every three yearsthereafter.(ii)Paymentsof2at the end of the second year and every three yearsthereafter.(iii)Paymentsof 3 at the end of the third year and every three yearsthereafter.Theinterestrateis5%convertiblesemiannually.Calculatethepresentvalueofthisperpetuity.(A)24(B) 29(C)34r-~39\/"---'(E)479.Youare given a perpetualannuity-immediatewith annualpaymentsincreasingin geometricprogression,witha commonratioof1.07. Theannualeffectiveinterestrateis12%. Thefirst paymentis 1. Calculatethe presentvalue of this annuity....
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- Spring '10