Chapter #4 Mastery Problems 1) Which one of the following will increase the future value of...

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Chapter #4 Mastery Problems 1) Which one of the following will increase the future value of a lump sum invested today? A B C. D Decreasing the amount of the lump sum Increasing the rate of interest Paying simple interest rather than compound interest Shortening the investment time period 2) At 9 percent interest how long does it take to double your money? Quadruple it? 3) Twenty years ago, you made a $1,000 investment. Fifteen years ago, you made an additional $3,000 investment. You earned 6 percent, compounded annually, on the first investment ($1,000) and 10 percent compounded annually, on the additional investment ($3,000). How much money do you have today? 4) Complete the blanks in the chart below. Use the space below the chart to work your calculations. a) c) Present Value 15,000 7,500 36,500 Years 15 9 20 Interest Rate 6% 8% 12% Future Value 200,000 21,350 16,192 Chapter #4 Mastery Problems 1) Which one of the following will increase the future value of a lump sum invested today? A B C. D Decreasing the amount of the lump sum Increasing the rate of interest Paying simple interest rather than compound interest Shortening the investment time period 2) At 9 percent interest how long does it take to double your money? Quadruple it? 3) Twenty years ago, you made a $1,000 investment. Fifteen years ago, you made an additional $3,000 investment. You earned 6 percent, compounded annually, on the first investment ($1,000) and 10 percent compounded annually, on the additional investment ($3,000). How much money do you have today? 4) Complete the blanks in the chart below. Use the space below the chart to work your calculations. a) c) Present Value 15,000 7,500 36,500 Years 15 9 20 Interest Rate 6% 8% 12% Future Value 200,000 21,350 16,192

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1 The correct answer is B Increasing the rate of interest Increasing the interest rate will result in higher returns on the investment thus increasing ... View the full answer