1/3 Test 2 Compound Interest Future Value K & A [15 marks] Please note that for True and False answers, True is A and False is B True/False Indicate whether the statement is true or false. 1. The amount, A, of a compound interest investment or loan can be determined using the formula A = P(1+1)*-1. 2. In the compound interest formula, interest, i, is expressed as a percent. 3. In the compound interest formula, n represents the term of the investment or loan. 4. If an amount is invested for 20 years at an interest rate that is compounded semi-annually there will be 20 compounding periods. 5. The future value, FV, of a compound interest investment or loan is the amount of the principal with compound interest. 6. The future value of a $1000 investment earning 5% interest, compounded monthly, for 1 year is $1795.86. Multiple Choice Identify the choice that best completes the statement or answers the question. 7. A principal amount is invested at 5% annual interest, compounded annually. Determine the number of compounding periods per year and the interest rate per compounding period (expressed as a decimal). a. 1.5.0 C. 1, 0.05 1, 0.005 b. 1, 0.5 d. 8. Jennie's bank offers 3.45% annual interest, compounded monthly, on her investment. Determine the number of compounding periods per year and the interest rate per compounding period (expressed as a decimal). a. 12, 0.2875 C. 12, 0.002 875 b. 12, 0.028 75 d. 12, 0.000 287 5 9. Loretta is investing $2000 at 3% annual interest, compounded annually, for 4 years. Determine the number of compounding periods for the term of the investment. a. 4 b. 12 c. 36 d. 48 10. Rajender deposited $7000 in an account earning 0.2% annual interest, compounded daily, for 2 years. Determine the number of compounding periods for the term of the deposit. c. 730 a. 2 b. 24 d. 1095 11. Determine the amount if $1150 is invested at 5% per year for 2.5 years, compounded semi-annually. a. $1293.75 c. $1301.12 d. $1341.11 b. $1299,19 12. Determine the amount if $13 000 is invested at 3.25% per year for 3 years, compounded quarterly. a. $14 309.14 b. $14 325.70 c. $14 750.12 d. $15 000.00 13. Determine the amount if $7995 is invested at 1.25% per year, compounded daily, from September 1st to October 10th inclusive. a. $8005.96 C. $8010.11 d. $8012.15 b. $8007.10 14. Credit Coop Consolidated offers a 1-year investment with an annual interest rate of 2.25%, compounded semi-annually. Determine the final amount on an initial investment of $3000. a. $3067.88 c. $3070.00 d. $3076.88 b. $3068.00 15. Determine the amount of $10 000 invested at 3.45% per year for 8 months with interest compoun monthly. a. $10 230.00 C. $12 271.02 d. $12 760.00 b. $10 232.33