28. Three years ago your mutual fund account was worth $489. Today it is worth $

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28. Three years ago your mutual fund account was worth $489. Today it is worth $635. What is your annualized rate of retum over the past three years? A. 8.99% B. 9.10% C. 9.36% D. 9.59% E. 9.72% 29. What is the present value of $250 to be received at the end of each year for the next 6 years if the discount rate is 12%? A. $ 1,250.00 B. S 1,151.19 C.$ 1,027.85 D. S 1,500.00 E.$ 1,300.00 30. Your grandparents would like to establish a trust fund that would pay annual payments to you and your heirs of $100,000 a year forsyer. How much do your parents nced to deposit into this trust fund today to achieve their goal if the fund can earn 6% interest? A. $678,342.13 B. $700,000.00 C. $1,413,435.76 D. $1,620,975.32 E. 51,666,66667 31. What is the effective annual rate of 105 percent APR compounded semi-annually? A. 10.60 percent B. 10.78 percent C 1092 percent D. 11.02 percent E. 11.18 peroeen 32. You have two choices for a bank loan: Bank A, which charges 8.75% APR compounded annually or Bank B, which charges 8.5% APR compounded monthly which bank would you choose? A. Bank A B. Bank B

Explanation / Answer

28.

AR = ((P + G) / P) ^ (1 / n) - 1

P = Principal = $ 489

G = Gain = $635 - $489 = $146

n = number of years = 3

AR = ((489 + 146) / 489) ^ (1 / 3) - 1

AR = (635 / 489) ^ (1/3) - 1

AR = 1.0909 - 1 = 0.0909 = 9.099% = 9.10%

Solution is Option B

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