Question

13. This morning, DJ’s invested $238,000 to help fund a company expansion project. How much additional money will the firm have three years from now if it can earn 4 percent rather than 3.5 percent on its savings?Assume it’s a compound interest.

A. $3,940.09

B. $3,842.78

C. $4,008.17

D. $4,219.68

14. You would like to give your daughter $75,000 towards her college education 17 years from now. How much money must you set aside today for this purpose if you can earn 8 percent compound interest on your investments?

A. $18,388.19

B. $20,270.17

C. $28,417.67

D. $29,311.1315.

Interest earned on both the initial principal and the interest reinvested from prior periods is called:

A. Free interest.

B. Dual interest

.C. Simple interest.

D. Compound interest.

16.A loan where the borrower receives money today and repays a single lump sum (total interest and loan principal) on a future date is called a(n) _____ loan.

A. Amortized.

B. Interest-only.

C. Balloon.

D. Pure discount.

Answer 1

1.
=Present Value*((1+rate2)^t-(1+rate1)^t)
=238000*(1.04^3-1.035^3)
=3842.77775

2.
=Future Value/(1+rate)^t
=75000/1.08^17
=20270.17136

3.
Compound interest

4.
Pure-discount loan