Business Smarts - Sample Module for Principles of Finance

Scenario I
A financial services company offers savings vehicles, such as CDs, to its clients. CD A has an amount of $2,000, a term of 1 year, and an annual interest of 5% paid annually. CD B has an amount of $5,000, a term of 3 years, and an annual interest of 6% paid annually. CD C has an amount of $8,000, a term of 4 years, and an annual interest of 7% paid annually. CD D has an amount of $12,000, a term of 6 years, and an annual interest of 8% paid annually. CD E has an amount of $15,000, a term of 10 years, and an annual interest of 10% paid annually.

1) What is the future value of CD A?

 a)  $2,000.

 b)  $2,500.

 c)  $2,100.

 d)  $1,905.

 e)  None of the above.

2) What is the future value of CD B?

 a)  $2,955.

 b)  $5,955.

 c)  $5,595.

 d)  $5,000.

 e)  None of the above.

3) What is the future value of CD C?

 a)  $10,527.

 b)  $10,955.

 c)  $10,844.

 d)  $10,488.

 e)  None of the above.

4) What is the future value of CD D?

 a)  $19,440.

 b)  $19,044.

 c)  $19,126.

 d)  $20,105.

 e)  None of the above.

5) What is the future value of CD E?

 a)  $38,910.

 b)  $39,910.

 c)  $39,810.

 d)  $38,190.

 e)  None of the above.

Scenario II
Person Alpha deposits $20,000 into an account that pays 8% annual interest on an annual basis and holds it for 9 years. Person Beta deposits $25,000 into an account that pays 9% annual interest on an annual basis and holds it for 12 years. Person Gamma deposits $30,000 into an account that pays 12% annual interest on an annual basis and holds it for 15 years. Person Delta deposits $40,000 into an account that pays 6% annual interest on an annual basis and holds it for 20 years. Person Epsilon deposits $50,000 into an account that pays 14% annual interest on an annual basis and holds it for 6 years.

6) What is the future value of the deposit for person Alpha?

 a)  $39,980.

 b)  $39,890.

 c)  $38,990.

 d)  $39,880.

 e)  None of the above.

7) What is the future value of the deposit for person Beta?

 a)  $70,731.

 b)  $69,328.

 c)  $70,317.

 d)  $69,832.

 e)  None of the above.

8) What is the future value of the deposit for person Gamma?

 a)  $164,536.

 b)  $146,208.

 c)  $164,208.

 d)  $164,280.

 e)  None of the above.

9) What is the future value of the deposit for person Delta?

 a)  $119,044.

 b)  $119,440.

 c)  $128,842.

 d)  $128,284.

 e)  None of the above.

10) What is the future value of the deposit for person Epsilon?

 a)  $119,750.

 b)  $109,750.

 c)  $109,507.

 d)  $113,045.

 e)  None of the above.

Scenario III
A financial services company offers savings vehicles, such as CDs, to its clients. CD A has an amount of $2,000, a term of 1 year, and an annual interest of 5% paid quarterly. CD B has an amount of $5,000, a term of 3 years, and an annual interest of 6% paid semi-annually. CD C has an amount of $8,000, a term of 4 years, and an annual interest of 7% paid semi-annually. CD D has an amount of $12,000, a term of 6 years, and an annual interest of 8% paid monthly. CD E has an amount of $15,000, a term of 10 years, and an annual interest of 10% paid semi-annually.

11) What is the future value of CD A?

 a)  $2,102.

 b)  $2,100.

 c)  $2,110.

 d)  $2,000.

 e)  None of the above.

12) What is the future value of CD B?

 a)  $5,955.

 b)  $5,790.

 c)  $5,970.

 d)  $5,570.

 e)  None of the above.

13) What is the future value of CD C?

 a)  $10,536.

 b)  $10,955.

 c)  $10,844.

 d)  $10,488.

 e)  None of the above.

14) What is the future value of CD D?

 a)  $19,632.

 b)  $19,044.

 c)  $19,362.

 d)  $19,326.

 e)  None of the above.

15) What is the future value of CD E?

 a)  $39,810.

 b)  $39,910.

 c)  $38,900.

 d)  $39,800.

 e)  None of the above.

Scenario IV
Person Alpha deposits $20,000 into an account that pays 8% annual interest on a semi-annual basis and holds it for 12 years. Person Beta deposits $25,000 into an account that pays 10% annual interest on a quarterly basis and holds it for 8.5 years. Person Gamma deposits $30,000 into an account that pays 12% annual interest on a quarterly basis and holds it for 16 years. Person Delta deposits $40,000 into an account that pays 6% annual interest on a monthly basis and holds it for 20 years. Person Epsilon deposits $50,000 into an account that pays 14% annual interest on a semi-annual basis and holds it for 6.5 years.

16) What is the future value of the deposit for person Alpha?

 a)  $50,266.

 b)  $51,266.

 c)  $51,226.

 d)  $50,364.

 e)  None of the above.

17) What is the future value of the deposit for person Beta?

 a)  $57,883.

 b)  $57,300.

 c)  $56,205.

 d)  $57,383.

 e)  None of the above.

18) What is the future value of the deposit for person Gamma?

 a)  $189,933.

 b)  $193,602.

 c)  $183,912.

 d)  $198,933.

 e)  None of the above.

19) What is the future value of the deposit for person Delta?

 a)  $130,482.

 b)  $131,627.

 c)  $132,840.

 d)  $132,408.

 e)  None of the above.

20) What is the future value of the deposit for person Epsilon?

 a)  $119,490.

 b)  $117,180.

 c)  $120,490.

 d)  $120,940.

 e)  None of the above.

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