Which of the following statements is (are) correct?
(x) The longer money can earn interest, the smaller the presentvalue must be to reach a financial goal.
(y) In the calculation of present values, the higher the interestrate, the smaller the present value will be.
(z) When calculating the number of years needed to grow aninvestment to a specific amount of money, the higher the interestrate, the shorter the time period needed to achieve thegrowth.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

6. You plan to invest $2,500 in a money market account which willpay an annual stated (nominal) interest rate of 8.5%, but whichcompounds interest on a weekly basis. If you leave this money ondeposit for one year (52 weeks), what will be your ending balancewhen you close the account?
A. $2,583.28
B. $2,611.72
C. $2,681.00
D. $2,721.60
E. $2,728.40

7. You can invest $1,000 for 5 years in a low-risk account thatearns 5% per year or you can choose a higher-risk account thatearns 10% per year. If you select the investment earning 10%,

A. you will double the interest earned of the investment earning5%.

B. you will more than double the interest earned of theinvestment earning 5%.

C. your profit will be less than double the interest earned ofthe investment earning 5%.

D. If both accounts pay the full amount of interest earned, thennone of these statements is correct.

8. Suppose you deposit $750 into your bank account today. If thebank pays 7.0 percent per year, then which of the followingstatements is (are) correct? (Hint: use Excel to create a templatethat will allow you to do all FV questions quickly andeasily.)
(x) $1,501.20 is in your account after 10 years if interest iscompounded quarterly but only $1,475.36 if the interest iscompounded annually.
(y) You will earn an additional $16.98 of interest in your accountafter 10 years if interest is compounded semi-annually instead ofannually, but $14.91 less interest if interest is compoundedsemi-annually instead of monthly.
(z) Although compounding daily instead of weekly will only add anadditional $0.61 after 10 years, compounding daily instead ofannually will add an additional $34.85.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only E. (x) only

9. Martha and George are the same age. At age 25, Martha invests$10,000 that earns 6.14 percent each year. At age 33, Georgeinvests $10,000 that earns 8.45 percent per year. Who has moremoney at age 55?

A. Both yield the same amount at age 55.

B. Martha, whom at age 25 invests $10,000 at 6.14 percent.

C. George, whom at age 28 invests $10,000 at 8.45 percent.

D. There is not enough information to determine which case earnsthe most money at age 55.

10. A deposit of $525 earns the following interest rates: 4 percentin the first year, 5 percent in the second year, and 6 percent inthe third year and7 percent in the fourth year. What would be thefourth year future value? A. $635.16
B. $639.08
C. $644.16
D. $650.24
E. $652.85