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Today, you deposit $2,400 in a bank account that pays 4 percent simple interest. How much interest will you earn over the next 5 years?

a. $96.00

b. $480.00

c. $519.97

d. $101.15

e. $492.16

12.

Jeff deposits $3,000 into an account which pays 2.5 percent interest, compounded annually. At the same time, Kurt deposits $3,000 into an account paying 5 percent interest, compounded annually. At the end of three years:

a. Kurt will have twice the money saved that Jeff does.

b. Kurt will have a larger account value than Jeff will.

c. Kurt will earn exactly twice the amount of interest that Jeff earns.

d. Both Jeff and Kurt will have accounts of equal value.

e. Jeff will have more money saved than Kurt.

13.

Beatrice invests $1,360 in an account that pays 5 percent simple interest. How much more could she have earned over a 3-year period if the interest had compounded annually?

a. $10.89

b. $21.44

c. $10.37

d. $9.95

e. $9.85

14.

Sixty years ago, your grandparents opened two savings accounts and deposited $200 in each account. The first account was with City Bank at 3 percent, compounded annually. The second account was with Country Bank at 3.5 percent, compounded annually. Which one of the following statements is true concerning these accounts?

a. The Country Bank account has paid $367.48 more in interest than the City Bank account.

b. The City Bank account has earned $211.19 more in interest than the Country Bank account.

c. The Country Bank account is currently worth $1,526.08.

d. The City Bank account is currently worth $1,201.54.

e. The Country Bank account has paid $397.30 more in interest than the City Bank account.

15.

You have $5,000 you want to invest for the next 45 years. You are offered an investment plan that will pay you 6 percent per year for the next 15 years and 10 percent per year for the last 30 years. How much will you have at the end of the 45 years? How much will you have if the investment plan pays you 10 percent per year for the first 15 years and 6 percent per year for the next 30 years?

a. $209,092.54; $201,516.38

b. $221,408.97; $119,949.94

c. $201,516.38 ; $201,516.38

d. $209,092.54; $209,092.52

e. $209,092.54; $119,959.94

16.

You want to have $25,000 for a down payment on a house 6 years from now. If you can earn 6.5 percent, compounded annually, on your savings, how much do you need to deposit today to reach your goal?

a. $17,420.73

b. $18,886.40

c. $17,880.69

d. $17,133.35

e. $18,211.17

17.

Bob bought some land costing $15,090. Today, that same land is valued at $64,764. How long has Bob owned this land if the price of land has been increasing at 6 percent per year?

a. 30 years

b. 26 years

c. 25 years

d. 23 years

e. 27 years

18.

Today, Tony is investing $16,000 at 6.5 percent, compounded annually, for 4 years. How much additional income could he earn if he had invested this amount at 7 percent, compounded annually?

a. $484.08

b. $389.28

c. $401.16

d. $442.79

e. $323.22

19.

By definition, a bank that pays simple interest on a savings account will pay interest:

a. Only on the principal amount originally invested.

b. On both the principal amount and the reinvested interest.

c. On interest.

d. Only at the beginning of the investment period.

e. Only if all previous interest payments are reinvested.