QUESTION: 665

Consider the following three investments:

Future valueyearsinterest rate
1.$50,000 89% per year
2.$20,000 612% per year
3.$35,000 37% per year

The present values of the 3 investments are:

$28,193, $12,145, $31,422
$99,628, $39,476, $42,877
$25,093, $10,133, $28,570
$24,192, $11,876, $27,864

Answer(s): C

Explanation:

Future value = Present value*(1+r)^N for annual compounding. Therefore, Future valueyearsratePresent Value
1.50,000 89% 50,000/(1.09)^8 = 25,093
2.20,000 612% 20,000/(1.12)^6 = 10,133
3.35,000 37% 35,000/(1.07)^3 = 28,570
Note that the future value must always be greater than the present value.

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QUESTION: 666

What is the relationship among the mean, median and mode in a symmetric distribution?

Mean is always the smallest value
Mean is always the largest value
None of these answers
Mode is the largest value
All equal

Answer(s): E

Explanation:

Since the distribution is symmetric, all three are equal.

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QUESTION: 667

If you deposit $5,000 today and make an additional deposit of $3,000 in 3 years, how much is in the account 6 years from today, if the money earns interest at 8% per year, compounded annually?

$10,077.70
$13,775.16
$17,335.61
$11,713.51
$12,695.00

Answer(s): D

Explanation:

This question requires the solution of two problems. Find the FV of the original $5,000 deposit which equals $7,934.37, then find the FV of the $3,000 deposit 3 years from now which equals $3779.14, and add the two together. On the BAII Plus, press 6 N, 8 I/Y, 5000 PV, 0 PMT, CPT FV. Then press STO 1. Then press 3 N, 3000 PV, CPT FV. Then press + RCL 1 = for the answer. On the HP12C, press 6 n, 8 i, 5000 PV, 0 PMT, FV.
Then press STO 1. Then press 3 n, 3000 PV, FV. Then press RCL 1 + for the answer.

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QUESTION: 668

A study by the National Park Service revealed that 50% of the vacationers going to the Rocky Mountain region visit Yellowstone Park, 40% visit the Tetons and 35% visit both. What is the probability that a vacationer will visit at least one of these magnificent attractions?

None of these answers
0.55
0.95
0.05
0.35

Answer(s): B

Explanation:

0.5 + 0.4 - 0.35 = 0.55

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