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Annual Interest Rate Quiz

With continuous compounding at 10 percent for 30 years, the future value of an initial investment of $2,000 is closest to

In 3 years you are to receive $5,000. If the interest rate were to suddenly increase, the present value of that future amount to you would

You are considering investing in a zero-coupon bond that sells for $250. At maturity in 16 years it will be redeemed for $1,000. What approximate annual rate of growth does this represent?

To increase a given present value, the discount rate should be adjusted

For $1,000 you can purchase a 5-year ordinary annuity that will pay you a yearly payment of $263.80 for 5 years. The compound annual interest rate implied by this arrangement is closest to

You are considering borrowing $10,000 for 3 years at an annual interest rate of 6%. The loan agreement calls for 3 equal payments, to be paid at the end of each of the next 3 years. (Payments include both principal and interest.) The annual payment that will fully pay off (amortize) the loan is closest to

When n = 1, this interest factor equals one for any positive rate of interest.

In a typical loan amortization schedule, the dollar amount of interest paid each period .

In a typical loan amortization schedule, the total dollar amount of money paid each period

You want to buy an ordinary annuity that will pay you $4,000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. The maximum price you would be willing to pay for the annuity is closest to

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