Finance (Rule of 72) Problems/Quiz

QUIZ#1–FIN 340–Based on Exercise#1-

Due Date-9-03-14-Wednesday or Earlier

· Solve the following five – Rule of 72 problems.

1. How many years does it take an investment to double earning 8%?

2. How many years does it take an investment to double earning 6%?

3. How many years does it take an investment to double earning 12%?

4. If inflation is 3.50 %, how many years does it take for prices to double ?

5. If inflation is 4.50%, how many years does it take for prices to double ?

· Solve the following six – Simple Interest problems.

6. Borrow $15,000 at 6% on a 270 day loan. Calculate the simple interest .

7. Borrow $25,000 at 10% on a 90 day loan. Calculate the simple interest .

8. Borrow $100,000 at 8% on a 40 month loan. Calculate the simple interest .

9. Borrow $50,000 at 7% on a 28 month loan. Calculate the simple interest .

10. Borrow $75,000 at 12% on a 2 5/8 year loan. Calculate the simple interest .

11. Borrow $10,000 at 14% on a 2 2/5 year loan. Calculate the simple interest .

· Solve the following five – Future Value problems.

12. An investor places $10,000 in a mutual fund that historically has

earned 9% a year and leaves it in for 30 years. Calculate the future value .

13. An investor places $15,000 in a stock portfolio that historically

has earned 10% a year and leaves it in for 20 years. Calculate the future value .

14. An investor places $5,000 in a mutual fund that historically has

earned 6% a year and leaves it in for 25 years. Calculate the

future value .

15. An investor places $50,000 in a bond mutual fund that

historically has earned 4% a year and leaves it in for 15 years.

Calculate the future value .

16. An investor places $25,000 in a stock portfolio that historically

has earned 12% a year and leaves it in for 40 years. Calculate

the future value .

END – QUIZ#1 – FIN 340 – Fall - 2014