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Q:

Calculate the periodic interest rate corresponding to 9.5% compounded monthly

A) 0.7916	B) 0.8916
C) 0.9916	D) 0.6916

Answer & Explanation Answer: A) 0.7916

Explanation:

i=j/m

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Filed Under: Compound Interest
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Q:

The profit earned by selling an article for Rs 900 is double the loss incurred when the same article is sold for Rs.490. At what price should the article be sold to make 25% profit?

A) 715	B) 469
C) 400	D) 750

Answer & Explanation Answer: D) 750

Explanation:

Let C.P be Rs. x

900 - x = 2(x - 450) => x = Rs.600

C.P = 600 gain required is 25%

S.P = [(100+25) x 600] / 100 = Rs.750

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Q:

The periodic interest rate corresponding to: 9.75% compounded semiannually

A) 4.875	B) 3.785
C) 4.865	D) 4.975

Answer & Explanation Answer: A) 4.875

Explanation:

i=j/m

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Q:

A loan is made for $3500 with an interest rate of 9% and payments made annually for 4 years. What is the payment amount?

A) 8906	B) 1089
C) 1070	D) 1080.34

Answer & Explanation Answer: D) 1080.34

Explanation:

A=R[(1+i)^n-1]/i(1+i)^n

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Q:

A retirement benefit of $12,000 is to be paid every 6 months for 25 years at interest rate of 7% compounded semi-annually. Find

(a) the present value to fund the end-of-period retirement benefit.

(b) the end-of-period semi-annual payment needed to accumulate the value in part (a) assuming regular investments for 30 years in an account yielding 8% compounded semi-annually

A) 245678	B) 234689
C) 281468.06	D) 234578

Answer & Explanation Answer: C) 281468.06

Explanation:

R=S[i/(1+i)^n-1]

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Q:

15 semiannual payments are made into a sinking fund at 7% compounded semiannually so that $4850 will be present. Find the amount of each payment rounded to the nearest cent

A) 251.35	B) 245.45
C) 235.87	D) 251

Answer & Explanation Answer: A) 251.35

Explanation:

R=S[i/(1+i)^n-1]

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Q:

What lump sum deposited today would allow payments of $2000/year for 7 years at 5% compounded annually?

A) 11572.71	B) 11876
C) 189756	D) 11576

Answer & Explanation Answer: A) 11572.71

Explanation:

A=R[(1+i)^n-1]/i(1+i)^n

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Q:

Sharon Stone deposits $500 at the beginning of each 3 months in an account earning 10% compounded quarterly. Determine how much money she has after 25 years

A) 22681.19	B) 23456
C) 44577	D) 25685

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