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Discrete Functions – Finance Unit

Multiple Choice - Identify the choice that best completes the statement or answers the question.

____ 1. Kevin invests $725 at 5.2%/a simple interest. What is the total amount in Kevin’s account at the end of 5
years?
a. $188.50 c. $913.50
b. $189.50 d. $2610.00
____ 2. What is the interest earned on $6500 at 8% simple interest for 9 months?
a. $390 c. $4860
b. $520 d. $6890
____ 3. Sabine borrows $2300 for 36 months at a fixed rate of simple interest. At the end of the time, she owes
$2748.50. What interest rate is she being charged?
a. 4.9%/a c. 12.5%/a
b. 6.5%/a d. 29.9%/a
____ 4. The graph the total amount of an investment of principal $P earning a fixed rate of simple interest over a
$P
period of 6 years. Which equation represents the amount as a function of time?
5000
a. A(t) = 84t c. A(t) = 3084t
b. A(t) = 3000+840t d. A(t) = 3000+84t 4000
____ 5. Colleen invests $1600 at 3.1% simple interest. How long will she have to
leave her investment in the bank before earning $500 in interest? 3000

a. 2 years and 79 days c. 49 years and 219 days


b. 10 years and 29 days d. 70 years and 353 days 2000

____ 6. At what rate of simple interest must $12 000 be invested to earn $150 in interest
1 2 3 4 5 6 Years
each quarter?
a. 0.31%/a c. 1.25%/a
b. 0.5%/a d. 5%/a
____ 7. Claude invests some money at a fixed rate of simple interest. His balance at the end of each of the first five
years is shown in the table. Which shows the total amount as the general term of a sequence.?
Year Balance
1 $888.25
2 $926.50
3 $964.75
4 $1003.00
5 $1041.25

a. c.
b. d.

8. How much interest would you earn on a $1750 investment at 18.8%/a simple interest for 18 months?
____
a. $493.50 c. $2243.50
b. $592.20 d. $5922.00
____ 9. George is trying to solve this problem
How much money must be invested at 4.2% simple interest to earn $100
interest each month?
Which equation could George use to solve this problem?
a. c.
P= P=
b. d.

P= P=
____ 10. Which equation would not work to find the fixed rate of simple interest on his loan?
a. I = Prt c.
r=
b. A = P(I + rt) d. I = A - P
____ 11. How many compounding periods are there in the investment below?
Principal Rate of Compound Compounding Time
Interest per Year Period
$11 000 2.8% quarterly 8 years
a. 2 c. 16
b. 8 d. 32

____ 12. Kate borrowed $3000 at 3.6%/a compounded monthly for 4 years. What is the future value of her investment?
a. $3009.00 c. $3432.00
b. $3036.16 d. $3463.91
____ 13. For an investment of $20 000 at 7.2%/a compounded semi-annually for 7 years, what is the total interest
earned?
a. $12 814.56 c. $32 936.72
b. $32 814.56 d. $52 936.72
____ 14. Maria borrows $12 000 at 9%/a interest compounded monthly for 10 years. How much money will she owe at
the end of 10 years?
a. $12 930.99 c. $28 408.36
b. $17 416.28 d. $29 416.28
____ 15. How much more will Xavier earn in 5 years on an investment of $9500 if he chooses an account that
compounds monthly at 6%/a than an account that offers 6%/a simple interest?
a. $363.14 c. $2850.00
b. $464.08 d. $3314.08
____ 16. Which will not give you the same future value for an investment?
a. $2000 invested at 1.6%/a compounded annually for 12 years
b. $2000 invested at 6.4%/a compounded quarterly for 4 years
c. $2000 invested at 3.2%/a compounded semi-annually for 8 years
d. $2000 invested at 19.2%/a compounded monthly for 2 years 8 months
____ 17. How much is the future value of an investment of $6300 at 2.6%/a compounded weekly for 1.5 years?
a. $6347.31 c. $6550.49
b. $6420.81 d. $6800.98
____ 18. Colin borrows $1700 at 5.8%/a interest compounded annually. How long will it take Colin to owe triple the
amount he originally borrowed?
a. 2.8 years c. 19 years
b. 15 years d. 20 years
____ 19. Which word or phrase cannot be used to describe the total amount for an investment that is calculated by
applying the interest rate to the principal and any interest already earned?
a. geometric series c. linear function
b. exponential growth d. compound
____ 20. What is the common ratio for a principal, $P, invested in an account that compounds annually for n years at
1%/a?
a. c.
b. d.
____ 21. Calculate the present value of the investment described in the table.
Rate of Compound Compounding Time Future Value
Interest per Year Period
5.6% annually 3 years $8000
a. $2107.25 c. $6793.57
b. $5128.21 d. $9420.67
____ 22. Jamal borrowed some money at 8.4% compounded quarterly. After 4 years, he repays $5926.53 for the
principal and interest. How much money did Jamal borrow?
a. $4250.00 c. $5868.22
b. $5453.78 d. $8264.42
____ 23. An investment is compounded semi-annually at 5.3%/a for 8 years. If its future value is $15 200, how much
interest will it earn?
a. $2869.75 c. $5197.69
b. $5144.20 d. $10 002.31
____ 24. Isaac is investing $16 000 that he would like to grow to at least $100 000 by the time he retires in 50 years.
What annual interest rate, compounded annually, will provide this?
a. 3.37% c. 5.70%
b. 3.73% d. 12.50%
____ 25. How much more is the present value of Product 1 than Product 2?
Product Rate of Compound Compounding Time Future Value
Interest per Year Period
1 4.5% semi-annually 3 years $10 000
2 5.4% annually 3 years $10 000
a. $90.00 c. $222.57
b. $209.84 d. $240.27
____ 26. Delia paid $200 for patio furniture, and she borrowed the rest at an interest rate of 15.6%/a compounded
monthly. Three years later, she paid $3900.37 for the principal and interest. How much did the patio furniture
originally cost?
a. $2250.00 c. $2650.00
b. $2450.00 d. $2724.83
____ 27. Determine the annual interest rate for the loan below.
Present Value Compounding Period Time Future Value
$950 quarterly 25 years $1488.39
a. 0.45% c. 1.57%
b. 1.15% d. 1.80%
____ 28. Korin can invest money at 6.5%/a compounded weekly. She would like $12 000 in 7 years. How much does
she need to invest now?
a. $7615.54 c. $7722.07
b. $7617.70 d. $7892.82
____ 29. Ty borrowed $6800 at 3.4%/a compounded semi-annually. He knows he will pay $7781.74 for the principal
and interest at the end of the loan, but he cannot remember the length of the loan. How many years is Ty’s
loan?
a. 2 years c. 6 years
b. 4 years d. 8 years

____ 30. What does A represent in the formula ?


a. present value c. principal amount
b. annual interest rate d. future value
____ 31. Which formula can you use to find the future value of an annuity?
a. simple interest c. arithmetic mean
b. sum of a geometric series d. compound interest
____ 32. What is the future value of the annuity below?
Regular Payment Rate of Compound Compounding Time
Interest per Year Period

$360 per month 7.2% monthly 7 years


a. $30 240.00 c. $38 578.83
b. $32 417.28 d. $39 170.30
____ 33. Kenny invests $50 every week at 3%/a compounded weekly for 2 years. What is the total amount of Kenny’s
investments at the end of 2 years?
a. $1235.14 c. $4814.40
b. $4800.00 d. $5357.58
____ 34. Maureen invests $1500 every 3 months at 5.2%/a compounded quarterly for 5 years. How much interest will
she earn after the 5th year?
a. $821.62 c. $4010.64
b. $1942.14 d. $34 010.64
____ 35. What is the future value of the annuity?
Regular Payment Rate of Compound Compounding Time
Interest per Year Period
$2500 every 6 months 4.4% semi-annually 15 years
a. $29 658.84 c. $104 658.84
b. $75 000.00 d. $149 958.85
____ 36. Fayad wants to invest money every month for 25 years. He would like to have $250 000 at the end of the 25
years. If he invests in an account at 6.6%/a compounded monthly, how much does he need to invest each
month?
a. $328.67 c. $1881.90
b. $760.64 d. $4185.36
____ 37. Every 6 months, Lucy invests $900 at 2.8%/a compounded semi-annually for 12 years. What is the value of
the first investment at the end of 12 years?
a. $925.20 c. $1256.47
b. $1239.13 d. $1274.06
____ 38. Sal & Kendra each invest $400 every month for 5 yrs. Sal’s bank gives 5.4%/a compounded monthly.
Kendra’s bank gives 6%/a compounded monthly. After 5yrs, how much more will Kendra have?
a. $240.00 c. $572.72
b. $426.12 d. $27 908.01
____ 39. What is the future value of the annuity?
Regular Payment Rate of Compound Compounding Time
Interest per Year Period
$650 13.2% quarterly 40 years
a. $117 728.00 c. $3 428 122.31
b. $696 848.51 d. $3 532 122.31
____ 40. Ida wants to invest money every 6 months for 25 years. She would like to have $500 000 at the end of the 25
years. How much does she need to invest every 6 months to meet her goal if her bank gives her 4.9%/a
compounded semi-annually?
a. $5203.31 c. $9532.89
b. $5386.85 d. $10 000.00
____ 41. What is the name for the value of an annuity at the beginning of the term?
a. principal c. payment
b. future value d. present value
____ 42. How much was the amount of the original loan?
Regular Payment Rate of Compound Compounding Time
Interest per Year Period
$1575 every 6 months 5.4% semi-annual
years
a. $8445.09 c. $17 076.01
b. $14 444.94 d. $24 143.61
____ 43. Molly wants to buy a camping time share for $12 500. She can borrow the money at 9.6%/a compounded
monthly for 5 years. What will Molly pay per month?
a. $163.13 c. $638.31
b. $263.13 d. $2560.32
____ 44. What is the interest paid on the annuity below at the end of the term?
Regular Payment Rate of Compound Compounding Time
Interest per Year Period
$68.50 per month 3.6% monthly 14 years
a. $414.29 c. $3426.85
b. $2478.91 d. $9029.09
____ 45. A 6.2-acre parcel of land is being offered for $49 900. Stanley pays $200 down and finances the rest at
5.95%/a compounded monthly. If he pays $350 every month, how long will it take him to pay off the loan?
a. 9 years c. 61 years 7 months
b. 20 years 7 months d. 246 years 3 months
____ 46. Calculate the present value of the annuity below.
Regular Payment Rate of Compound Compounding Time
Interest per Year Period
$4200 per year 8.7% annually 25 years
a. $42 278.07 c. $105 000.00
b. $47 530.70 d. $340 293.58
____ 47. Carlos pays $25 for skis and borrows the remaining amount. The loan payments are $75 every 3 months for

years. The interest rate is 16.2%/a compounded quarterly. What was the selling price of the skis?
a. $367.52 c. $417.52
b. $392.52 d. $523.10
____ 48. Calculate the present value of the annuity at the end of the term.
Regular Payment Rate of Compound Compounding Time
Interest per Year Period
$18.50 per week 7.8% weekly
years
a. $678.05 c. $2831.27
b. $924.77 d. $2944.60
____ 49. Henry is investing $20 000 at 5.2%/a compounding quarterly. He wants to withdraw an equal amount from
this investment each quarter for the next 15 years as vacation money. What is the most he can take out each
quarter?
a. $222.12 c. $1476.18
b. $482.12 d. $1952.98
____ 50. Enrique wants to buy a boat for $28 000. He can pay $2500 and finance the remaining amount with a loan at
11.4%/a compounded monthly. The loan payments are monthly and he can choose either a 6-year or an 8-year
term. How much more will he pay in interest for the longer term loan?
a. $84.52 c. $490.61
b. $406.09 d. $3660.48
MULTIPLE CHOICE - Solutions
1 C D
2 A A
3 B D
4 D C
5 B B
6 D B
7 C B
8 A A
9 B C
10 D C
11 D B
12 D D
13 A
14 D
15 B
16 A
17 C
18 D
19 C
20 B
21 C
22 A
23 C
24 B
25 B
26 C
27 D
28 A
29 B
30 D
31 B
32 D
33 D
34 C
35 C
36 A
37 C
38 B