#1
What is the formula to calculate compound interest?
Principal × (1 + Rate)^Time
ExplanationFormula for calculating compound interest.
#2
What is the rule of 72 used for in finance?
Estimating the time it takes for an investment to double
ExplanationRule of thumb for estimating doubling time.
#3
If you invest $5000 in a savings account with an annual interest rate of 4%, how much will you have in 10 years?
$7,324.97
ExplanationFuture value calculation for a savings account.
#4
If an investment grows by 5% annually, how many years will it take to double in value?
15.0 years
ExplanationTime required for investment to double with 5% annual growth.
#5
If an investment doubles in value every 5 years with continuous compounding, what is the annual growth rate?
10%
ExplanationContinuous compounding with doubling every 5 years corresponds to a 10% annual growth rate.
#6
What is the doubling time of an investment with an annual interest rate of 8%?
12.5 years
ExplanationIt takes 12.5 years for an investment to double at an 8% annual interest rate.
#7
What is the present value of $10,000 received in 5 years with an annual interest rate of 8%?
$6209.68
ExplanationPresent value calculation.
#8
What is the effective annual rate (EAR) if the nominal rate is 6% compounded quarterly?
6.17%
ExplanationEffective Annual Rate (EAR) calculation.
#9
What is the formula for the future value of an annuity?
FV = PMT × [(1 + r/n)^(nt) - 1] / (r/n)
ExplanationFormula for calculating future value of an annuity.
#10
If the present value of an investment is $5000, and it is expected to grow to $8000 in 5 years, what is the annual growth rate?
8%
ExplanationAnnual growth rate calculation.
#11
What is the future value of $5000 invested for 10 years at an annual interest rate of 6% compounded monthly?
$8934.40
ExplanationFuture value calculation with monthly compounding.
#12
Which of the following represents continuous compounding?
FV = PV × e^(rt)
ExplanationFormula representing continuous compounding.
#13
Which of the following formulas is used to calculate continuously compounded interest?
FV = PV × e^(rt)
ExplanationFormula for continuously compounded interest.
#14
What is the formula to calculate the present value of an annuity?
PV = PMT × [(1 - (1 + r)^-n) / r]
ExplanationFormula for calculating present value of an annuity.
#15
What is the future value of $2000 invested for 3 years at an annual interest rate of 5% compounded quarterly?
$2,391.48
ExplanationFuture value calculation with quarterly compounding.
#16
What is the formula for calculating the number of periods needed to reach a future value with compound interest?
n = log(FV / PV) / log(1 + r)
ExplanationFormula for calculating the number of periods.