Melissa Hart Test Bank

Focus on Personal Finance, 7e Jack Kapoor, Les Dlabay, Robert Hughes, Melissa Hart (Test Bank All Chapter, Answers at the end of each Chapter)

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Version 1 1 Chapter 1 (1) 1) If inflation is expected to be 8.40 percent, how long will it take for prices to double?

• 18.57 years
• 8.57 years
• 12.57 years
• 6.57 years
• 7.57 years

2) If a $10,000 investment earns interest of $1,200 in 1 year, what is its rate of return?

• 77 percent
• 57 percent
• 12 percent
• 100 percent
• 24 percent

3) If a $10,000 investment earns a 5 percent annual return, what should its value be after 1 year?

A) $10,050

B) $5,100

C) $5,000

D) $10,000

E) $10,500

4) If a $10,000 investment earns a 7 percent annual return, what should its value be after 4 years? Use Exhibit 1-A.

A) $14,700

B) $10,035

C) $13,110

D) $12,800

E) $10,700

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Version 1 2 5) If Melinda Miller estimates that her $400 weekly grocery bill will increase at an annual inflation rate of 3 percent, what should her weekly grocery bill be in 2 years? Use Exhibit 1- A.

A) $80.00

B) $120.00

C) $424.40

D) $526.40

E) $433.50

6) If you deposit $500 into a certificate of deposit earning 4.8 percent, what would be your earnings after 12 months?

A) $26.50

B) $500.00

C) $24.00

D) $548.00

E) $21.50

7) Randy Hill wants to retire in 25 years with $1,000,000. If he can earn 10 percent per year on his investments, how much does he need to deposit each year to reach his goal? Use Exhibit 1-B. (Round your answer to the nearest dollar.)

A) $10,168

B) $20,000

C) $40,000

D) $9,835

• None of these choices are correct.

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Version 1 3 Answer Key

Test name: ch 1 (1)

1) B 2) C 3) E 4) C 5) C 6) C 7) A

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