1.

Find the simple interest on a $400 investment made for 5 years at an interest rate of 7%/year. What is the accumulated amount?

A) The simple interest is $140, the accumulated amount is $540.

B) The simple interest is $115, the accumulated amount is $515.

C) The simple interest is $120, the accumulated amount is $520.

D) The simple interest is $125, the accumulated amount is $555.

2.

If the accumulated amount is $3,720 at the end of 3 years and the simple rate of interest is 8%/year, what is the principal?

A) The principal is $3,500.

B) The principal is $3,360.

C) The principal is $3,000.

D) The principal is $3,200.

3.

Find the accumulated amount A if the principal P = $2,000 is invested at the interest rate of r = 6% per year for t = 6 years, compounded annually.

A) The accumulated amount is $3,508.28.

B) The accumulated amount is $3,194.16.

C) The accumulated amount is $2,837.04.

D) The accumulated amount is $2,708.89.

4.

Find the accumulated amount A if the principal P = $11,000 is invested at the interest rate of r = 5% per year for t = 5.5 years, compounded quarterly.

A) The accumulated amount is $14,585.32.

B) The accumulated amount is $13,785.93.

C) The accumulated amount is $14,100.05.

D) The accumulated amount is $14,457.17.

5.

Determine the simple interest rate at which $1,500 will grow to $1,550 in the 8 months. Round your answers to the nearest tenth of percent.

A) The interest rate is 5%/year.

B) The interest rate is 4.33%/year.

C) The interest rate is 4.76%/year.

D) The interest rate is 66.67%/year.

E) The interest rate is 3.06%/year.

6.

Find the present value of $40,000 due in 4 years at the given rate of interest 8%/year compounded monthly.

A) The present value is $28,948.67.

B) The present value is $29,433.94.

C) The present value is $29,076.82.

D) The present value is $29,748.06.

7.

In order to help finance the purchase of a new house, the Abdullahs have decided to apply for a short-term loan (a bridge loan) in the amount of $140,000 for a term of 1 mo. If the bank charges simple interest at the rate of 12%/year, how much will the Abdullahs owe the bank at the end of the term?

A) $141,400

B)

$140,012

C) $146,800

D) $144,900

8.

The Kwans are planning to buy a house 6 years from now. Housing experts in their area have estimated that the cost of a home will increase at a rate of 6%/year during that period. If this economic prediction holds true, how much can the Kwans expect to pay for a house that currently costs $160,000?

A) $218,199

B) $221,562

C) $230,490

D) $226,963

9.

The manager of a money market fund has invested $4.2 million in certificates of deposit that pay interest at the rate of 5.4%/year compounded quarterly over a period of 5 years. How much will the investment be worth at the end of 5 years?

A) 5,491,921.88

B) 3,211,990.34

C) 1,291,921.88

D) 12,024,347.20

10.

Find the effective rate corresponding to nominal rate 6% / year compounded monthly. Round the answers to the nearest hundredth of percent.

A) 6.538%

B) 5.858%

C) 6.598%

D) 6.168%

11.

Find the interest rate needed for an investment of $4,000 to grow to an amount of $5,000 in 4 yr if interest is compounded continuously. Please round the answer to the nearest hundredth of percent.

A) 5.58 %/yr

B) 5.70 %/yr

C) 6.63 %/yr

D) 5.01 %/yr

E) 5.92 %/yr

12.

Anthony invested a sum of money 6 yr ago in a savings account that has since paid interest at the rate of 7%/year compounded quarterly. His investment is now worth $19,713.77. How much did he originally invest? Please round the answer to the nearest cent.

A) $13,000.01

B) $12,500.01

C) $14,000.01

D) $11,500.01

E) $11,000.01

13.

Georgia purchased a house in 1998 for $220,000. In 2003 she sold the house and made a net profit of $50,000. Find the effective annual rate of return on her investment over the 5-yr period. Please round the answer to the nearest tenth of percent.

A) 3.7%/yr

B) 3.1%/yr

C) 4.4%/yr

D) 4.2%/yr

E) 5.6%/yr

14.

Find the amount of an ordinary annuity of 10 yearly payments of $1,800 that earn interest at 10% per year, compounded annually.

A) $4,668.74

B) $28,687.36

C) $87,798.04

D) $3,600.00

15.

Robin, who is self-employed, contributes $4,000/year into a Keogh account. How much will he have in the account after 15 years if the account earns interest at the rate of 6.5%/year compounded yearly?

A) $96,728.68

B) $10,287.36

C) $158,267.14

D) $3,771.28

16.

If a merchant deposits $1,500 annually at the end of each tax year in an IRA account paying interest at the rate of 10%/year compounded annually, how much will she have in her account at the end of 25 years? Round your answer to two decimal places.

A) $16,252.06

B) $147,520.59

C) $5,250.00

D) $34,663.65

17.

Find the present value of an ordinary annuity of $600 payments each made quarterly over 5 years and earning interest at 4% per year compounded quarterly.

A) $8,154.20

B) $2,671.09

C) $10,827.33

D) $56,916.87

18.

Juan invested $24,000 in a mutual fund 5 years ago. Today his investment is worth $34,616. Find the effective annual rate of return on his investment over the 5-year period.

A) 10.3%/year

B) 8%/year

C) 83%/year

D) 8.3%/year

19.

Find the amount of an ordinary annuity for 5 years of quarterly payments of $2,200 that earn interest at 4% per year compounded quarterly.

A) $11,222.21

B) $65,511.77

C) $48,441.81

D) $2,684.42

20.

Find the present value of the ordinary annuity. Please round the answer to the nearest cent.$2,000 per semiannual period for 7 yr at 12%/year compounded semiannually

A) P = $18,589.97

B) P = $17,913.54

C) P = $20,003.52

D) P = $13,147.80

E) P = $9,629.07

Column 1

Column 2

Column 3

Column 4

Column 5

Column 6

Column 7

Column 8

Column 9

Column 10

Column 11

Output
Level

Price per unit

Total Fixed Cost

Total Variable Cost

Total Cost

Average Fixed Cost

Average Variable Cost

Average Total Cost

Marginal
Cost

Marginal Revenue

Total Revenue

0

 $             –   

 NA

1

 $    113.00

2

 $    213.00

3

 $    300.00

4

 $    375.00

5

 $    463.00

6

 $    563.00

7

 $    675.00

8

 $    813.00

9

 $    975.00

10

 $ 1,163.00

Output
Level

Price

Total Revenue

Profit or Loss

0

1

2

3

4

5

6

7

8

9

10

Accurately calculated cost data (total fixed, total, average fixed, average variable, average total, and marginal) and revenue data (marginal and total) for output level ranging from 1 to 10 in Table-1.  Showed calculations in summary form. Correctly assumed data represented a firm in pure competition. (40 points)

Completed Table-1 as Microsoft Excel spreadsheet or Word table. (8 points)

Explained the MC=MR Rule. (12 points)

Identified market structures the MC=MR Rule applies to.  (8 points)

Explained why MC=MR Rule applies to these market structures.  (12 points)

Graphed all the data in column 9 of Table-1 (marginal cost) as curves in Microsoft Excel. (8 points)

Graphed all the data in column 10 of Table-1 (marginal revenue) as curves in Microsoft Excel. (8 points)

Explained the profit maximizing (or loss minimizing) output for Joseph’s Farms, Inc. (14 points)

Explained whether or not there is an economic profit for Joseph’s Farms, Inc. (14 points)  

Accurately calculated price, total revenue, and profit or loss data for output level ranging from 0 to 10 in Table-2 using data from Table-1. Showed calculations. (10 points)

Completed Table-2 as Microsoft Excel spreadsheet or Word table. (2 points)

Accurately calculated the break-even output level (break-even point) for Joseph’s Farms, Inc. using data in Table-2.  Showed calculations.

Style (4 points): Tone, audience, and word choice.

Usage and Mechanics (4 points): Grammar, spelling, and sentence structure.

APA Elements (12 points): In text citations and references, paraphrasing, and appropriate use of quotations and other elements of style.