Chapter 3 Investments and loans Test A

Section I – Multiple choice

1 Sophie invests $70 000 at 7% p.a. interest compounding annually. What is the future value
after 5 years? (Answer to the nearest dollar)
(A) $28 179 (B) $74 900 (C) $94 500 (D) $98 179

2 The compound interest on $4600 at 12% p.a. for 2 years is:

(A) $1104.00 (B) $1170.24 (C) $4600.00 (D) $5770.24

3 What is the interest earned for 2 years on $10 000 at 10% p.a. interest compounding
monthly? (Answer to the nearest dollar).
(A) $167 (B) $2100 (C) $2204 (D) $88 497

4 When a company paid a dividend of 45 cents per share its market price was $11.60. The
dividend yield is closest to:
(A) 3.9% (B) 4.5% (C) 5.2% (D) 7.8%

5 There are 50 million shares in a company. What is the dividend if the company declares a
net profit of $40.3 million and distributes all of the profit to shareholders?
(A) $0.80 (B) $0.81 (C) $1.24 (D) $1.25

6 A house was bought for $860 000 and appreciated at the rate of 6% p.a. What will be the
value of the house after 3 years? (Answer to the nearest dollar).
(A) $164 274 (B) $911 600 (C) $1 014 800 (D) $1 024 274

7 What is the monthly repayment for a loan of

$320 000 at 8.25% p.a. interest rate for 25 Monthly repayments per $1000
years? Term 8.00% 8.25%
20 years $8.36 $8.52
(A) $252.16 (B) $272.64
(C) $2521.60 (D) $2726.40 25 years $7.72 $7.88

8 Claudia borrows $320 000 over 24 years at a reducible interest rate of 5.9% p.a. She pays
$2130 per month. What is the total paid on this loan?
(A) $293 440 (B) $453 120 (C) $613 440 (D) $773 120

9 A credit card has a daily interest rate of 0.06% per day (no interest free period). Find the
interest charged on $1700 for 15 days. Answer correct to the nearest cent.
(A) $15.30 (B) $15.36 (C) $1715.30 (D) $1715.36

10 Minh has a credit card debt of $3456 that will accrue interest at the rate of 17.4% p.a.
compounding daily. After one month (30 days), the amount he will owe will be closest to:
(A) $3456.00 (B) $3457.65 (C) $3505.77 (D) $4058.50

© G K Powers 2018 Published by Cambridge University Press 1

 Chapter 3 Investments and loans Test A

Section II – Short answer

1 Bailey is investing $7500 in managed fund. What sum of money will he receive if invested
for 4 years at:
a. 6% p.a. interest compounding annually. b. 6% p.a. interest compounding quarterly.

2 Calculate the amount of compound interest earned, if $4000 is invested at 5% per annum
for 20 years (to the nearest cent).

3 The table below shows the future value when $1 is invested at the given interest rate for
the given number of periods. The interest is compounded per period. Use the table to
calculate the future value of:
a. $70 000 invested for 4 years at 6% p.a. Period 3% 6% 9%
compounded annually.
2 1.061 1.124 1.188
b. $200 000 invested for 1 year at 6% p.a. 4 1.126 1.262 1.412
compounded six-monthly.

4 Nicholas owned 1300 shares with a market value of $12.52 each. What is the total
dividend received from these shares if the dividend yield is 4.5%? Answer correct to the
nearest cent.

5 What is the likely price of a shirt in 5 years if it costs $60 and the inflation rate is predicted
to be 3% p.a.?

6 Daniel borrows $180 000 over 7 years at an interest rate of 18% p.a. reducible. He pays
$1500 per fortnight.
a. How much will Daniel pay back altogether?
b. What is the interest paid for this loan?

© G K Powers 2018 Published by Cambridge University Press 2