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- Question
If the rate of inflation for the next 20 years is 2.5% per year, what annual income will be needed 20 years from now to have the same purchasing power as a $30,000 annual income today?
Options- A. 39158
- B. 49158
- C. 59158
- D. 69158
- Correct Answer
- 49158
Explanationi=j/m
FV = PV(1+ i)^n
- 1. A chartered bank offers a five-year Escalator Guaranteed Investment Certificate.In successive years it pays annual interest rates of 4%, 4.5%, 5%, 5.5%, and 6%, respectively, compounded at the end of each year. The bank also offers regular five-year GICs paying a fixed rate of 5% compounded annually. Calculate and compare the maturity values of $1000 invested in each type of GIC. (Note that 5% is the average of the five successive one-year rates paid on the Escalator GIC.)
Options- A. 1276.28
- B. 1234
- C. 1278
- D. 1256 Discuss
- 2. Two payments of $10,000 each must be made one year and four years from now. If money can earn 9% compounded monthly, what single payment two years from now would be equivalent to the two scheduled payments?
Options- A. 19296
- B. 19396
- C. 19496
- D. 19596 Discuss
- 3. The periodic interest rate corresponding to: 9.75% compounded semiannually
Options- A. 4.875
- B. 3.785
- C. 4.865
- D. 4.975 Discuss
- 4. Assume that money can be invested at 8% compounded quarterly,which is larger,$2500 now or $3800 in 5 years?
Options- A. 1557.29
- B. 2557.29
- C. 2567
- D. 2457 Discuss
- 5. Calculate the future value of $3,000 invested at 7% for 5 years
Options- A. 4207.66
- B. 5207
- C. 4376
- D. 5687 Discuss
- 6. Payments of $2000 and $1000 were originally scheduled to be paid one year and five years, respectively, from today. They are to be replaced by a $1500 payment due four years from today, and another payment due two years from today. The replacement stream must be economically equivalent to the scheduled stream. What is the unknown payment, if money can earn 7% compounded semiannually?
Options- A. 1548
- B. 1348
- C. 1648
- D. 1748 Discuss
- 7. The compound interest on a certain sum for 2 years at 10% per annum is Rs. 1155. The simple interest on the same sum for double the time at half the rate percent per annum is ?
Options- A. Rs. 1100
- B. Rs. 5500
- C. Rs. 1400
- D. Rs. 4120 Discuss
- 8. In what time will Rs. 3300 becomes Rs. 3399 at 6% per annum interest compounded half-yearly ?
Options- A. Quarter months
- B. Half year
- C. 2 years
- D. 1 year Discuss
- 9. What is the Compound interest on Rs. 5000 in 3 years, if the rate of interest is 4% for the first year, 3% for the second year and 2% for the third year?
Options- A. Rs. 435.21
- B. Rs. 453.12
- C. Rs. 436.12
- D. Rs. 463.12 Discuss
- 10. A bank offers 15% compound interest per half year. A customer deposits Rs 2400 each on 1st January and 1st July of a year. At the end of the year, the amount he would have gained by way of interest is
Options- A. Rs 2268
- B. Rs 1134
- C. Rs 567
- D. Rs 283 Discuss
Compound Interest problems
Search Results
Correct Answer: 1276.28
Explanation:
FV = $1000(1.04)(1.045)(1.05)(1.055)(1.06) = $1276.14
the maturity value of the regular GIC is
FV = $ 1000 x = $1276.28
Correct Answer: 19296
Explanation:
The single equivalent payment will be PV + FV.
FV = Future value of $10,000, 12 months later
$10,000 *(1.0075)/12
$10,938.07
PV= Present value of $10,000, 24 months earlier
$10,000/(1.0075)24
$8358.31
The equivalent single payment is
$10,938.07 + $8358.31 = $19,296.38
Correct Answer: 4.875
Explanation:
i=j/m
Correct Answer: 2557.29
Explanation:
First find the present value of $3800,then compare present values:
M = p(1+i/4)^4n
Correct Answer: 4207.66
Explanation:
F=P(1+i)^n
Correct Answer: 1648
Explanation:
FV1 = Future value of $2000, 1 year later
= PV (1+ i)^n
Correct Answer: Rs. 1100
Explanation:
Let the sum be Rs.x. Then,
=> x =5500
sum = Rs. 5500.
So, S.I = Rs. = 1100
Correct Answer: Half year
Explanation:
3300 ----- 3% ? (1st time interval, 99) ? 3399.
Here, time interval is given as half-yearly i.e. 6 months.
Correct Answer: Rs. 463.12
Correct Answer: Rs 1134
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