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3. Jeff opens a charge card account with a department store. In the charge account agreement, the store indicated it charges 1.5% each month on the unpaid balance. What nominal annual interest rate is being charged? A) 8% B) 18% C) 16% D) 14%

3. Jeff opens a charge card account with a department store. In the charge account agreement, the store indicated it charges 1.5% each month on the unpaid balance. What nominal annual interest rate is being charged? A) 8% B) 18% C) 16% D) 14%

Economics Today and Tomorrow, Student Edition
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter6: Saving And Investing
Section6.1: Why Save?
Problem 6R
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Choose the correct answers for the following questions: 1. Calculate the final amount in a bank account after 2 years if $1000 is deposited at 6% per year interest compounded quarterly. 500 120mvong B) $1136 A) $1126 C) $1226 D) $11260 2. Jan decides to invest $9,000 in a 401(k). If this is invested for 40 years, how much will there be in the account at the end? Assume that he invests in a broad stock market no-load index fund that has historically returned 12% per year. B) $877,458.73 A) $537,458.73 C) $837,458.73 D) $837,968.73 3. Jeff opens a charge card account with a department store. In the charge account agreement, the store indicated it charges 1.5% each month on the unpaid balance. What nominal annual interest rate is being charged? B) 18% A) 8% C) 16% D) 14% 4. Sue opens a charge card account with a department store. In the charge account agreement, the store indicated it charges 2% each month on the unpaid balance. If the nominal annual interest rate is being charged is %24, what is the effective annual interest rate? B) 20.82% A) 19.82% C) 16.82% 5. The basic requirement(s) that must be met for an asset to be depreciated? A) It must be used in business or held for production of income. B) It must have a definite service life, and that life must be longer than 1 year. C) It must be something that wears out, decays, gets used up, becomes obsolete, or loses value from natural causes. D) 26.82% D) All of the mentioned. 6. How long would it take for an investment to triple if the interest rate is 10% compounded annually? A) n = 13 years B) n = 1.53 years C) n = 12.53 years D) n=11.53 years 7. An asset purchased for $50,000 is to be depreciated over 5 years using the straight-line method. Salvage value is $10,000. Its book value after 3 years is: nasy? Y A) $24.000 B) $26.000 C) $25.500 D) $25.000
Transcribed Image Text:Choose the correct answers for the following questions: 1. Calculate the final amount in a bank account after 2 years if $1000 is deposited at 6% per year interest compounded quarterly. 500 120mvong B) $1136 A) $1126 C) $1226 D) $11260 2. Jan decides to invest $9,000 in a 401(k). If this is invested for 40 years, how much will there be in the account at the end? Assume that he invests in a broad stock market no-load index fund that has historically returned 12% per year. B) $877,458.73 A) $537,458.73 C) $837,458.73 D) $837,968.73 3. Jeff opens a charge card account with a department store. In the charge account agreement, the store indicated it charges 1.5% each month on the unpaid balance. What nominal annual interest rate is being charged? B) 18% A) 8% C) 16% D) 14% 4. Sue opens a charge card account with a department store. In the charge account agreement, the store indicated it charges 2% each month on the unpaid balance. If the nominal annual interest rate is being charged is %24, what is the effective annual interest rate? B) 20.82% A) 19.82% C) 16.82% 5. The basic requirement(s) that must be met for an asset to be depreciated? A) It must be used in business or held for production of income. B) It must have a definite service life, and that life must be longer than 1 year. C) It must be something that wears out, decays, gets used up, becomes obsolete, or loses value from natural causes. D) 26.82% D) All of the mentioned. 6. How long would it take for an investment to triple if the interest rate is 10% compounded annually? A) n = 13 years B) n = 1.53 years C) n = 12.53 years D) n=11.53 years 7. An asset purchased for $50,000 is to be depreciated over 5 years using the straight-line method. Salvage value is $10,000. Its book value after 3 years is: nasy? Y A) $24.000 B) $26.000 C) $25.500 D) $25.000
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