Sample FE Exam Problems

Solutions

1. What to do: Find P or F from Single Amounts

1. Answer is (b)

2. P = 4P(P/F, 6%, n)
(P/F, 6%, n) = P/4P = 0.2500

From 6% interest table, 24 > n > 23

Answer is (c)

3. F = 10,000(F/P, 10%, 20)

= 10,000(6.7275)
= $67,275

Answer is (c)

4. P = 20,000(P/F, 10%, 5)
= 20,000(0.6209)
= $12,418

Answer is (c)

5. F = 20,000(F/P, 10%, 4)
= 20,000(1.4641)
= $29,282

Answer is (a)

6. P = 5,000(P/A, 10%, 10) + 1,000(P/G, 10%, 10)

= 5,000(6.1446) + 1,000(22.8913)
= 30,723 + 22,891.30
= $53,614.30

F = 53,614.30(F/P, 10%, 10)

= 53,614.30(2.5937)
= $139,059.41

Answer is (d)
7. F = 2,000(F/P,12%,10) + 3,000(F/P,12%,8) + 3,000(F/P,12%,5)
+ 3,000(F/P,12%,4)
= 2,000(3.1058) + 3,000(2.4760) + 3,000(1.7623) + 3,000(1.5735)
= $23,647

Answer is (d)

What to do: Find P or F from Single Amounts

How to do it:
1. The equation that is used to calculate a present worth from a single future
amount is:

a. P = F (1 + i ) n

b. P = F 

c. P = F 

d. P = F 

2. The length of time required for money to quadruple in value at an interest rate of
6% per year is nearest to:

a. 12 years

b. 18 years

c. 24 years

d. 30 years

3. A deposit of $10,000 now at 10% per year interest will accumulate to how much
twenty years from now?

a. $30,000

b. $46,275

c. $67,275

d. $83,195
  

4. If a company wanted to make a single investment now instead of spending

$20,000 five years from now, how much would the investment be at an interest
rate of 10% per year?

a. $3,276

b. $5,276

c. $12,418

d. $32,300

5. In order to update a production process, a company can spend money now or

four years from now. If the amount now would be $20,000, what equivalent
amount could the company spend four years from now at an interest rate of 10%
per year?

a. $29,282

b. $35,620

c. $47,690

d. $63,380

6. What is the equivalent amount in year ten of an expenditure of $5,000 in year

one, $6,000 in year two, and amounts increasing by $1,000 per year through
year ten?

Assume the interest rate is 10% per year.

a. $30,723

b. $53,614

c. $92,169

d. $139,060

7. In order to have money for their son's college education, a young couple started
a savings plan into which they made intermittent deposits. They started the
account with a deposit of $2,000 (in year zero) and then added $3,000 in years
two, five and six. The amount they had in the account in year ten if they earned
interest at 12% per year was nearest to:

a. $15,170

b. $17,320

c. $20,913

d. $23,647