Question 1

Solve the problem.
-James purchased a bond for  $3900\$ 3900$3900 , and sixteen months later he sold it for  $4300\$ 4300$4300 . What annual rate would he have to earn in a savings account compounded monthly, to earn the same money on his investment?

Accepted Answer

A)    6.14%6.14 \%6.14% 
B)    8.14%8.14 \%8.14% 
C)    8.89%8.89 \%8.89% 
D)    9.64%9.64 \%9.64%E) None of the above
F) All of the above

Question 2

Find the compound amount for the deposit. Round to the nearest cent.
- $110,000\$ 110,000$110,000  at  1.41%1.41 \%1.41%  compounded quarterly for 5 years.

Accepted Answer

A)    $111,952.47\$ 111,952.47$111,952.47 
B)    $145,548.70\$ 145,548.70$145,548.70 
C)    $117,976.80\$ 117,976.80$117,976.80 
D)    $118,020.27\$ 118,020.27$118,020.27E) C) and D)
F) B) and D)

Question 3

Find the interest. Round to the nearest cent.
- $790\$ 790$790  at  8.8%8.8 \%8.8%  for 10 months

Accepted Answer

A)   Interest  =$5793.00=\$ 5793.00=$5793.00 
B)   Interest  =$6.95=\$ 6.95=$6.95 
C)   Interest  =$57.93=\$ 57.93=$57.93 
D)   Interest  =$695.16=\$ 695.16=$695.16E) A) and B)
F) A) and C)

Question 4

Find the future value of the ordinary annuity. Interest is compounded annually, unless otherwise indicated.
- PMT=$2500,5.1%\mathrm{PMT}=\$ 2500,5.1 \%PMT=$2500,5.1%  interest compounded quarterly for 16 years

Accepted Answer

A)    $245,059.03\$ 245,059.03$245,059.03 
B)    $441,137.46\$ 441,137.46$441,137.46 
C)    $239,505.34\$ 239,505.34$239,505.34 
D)    $103,373.82\$ 103,373.82$103,373.82E) All of the above
F) A) and B)

Question 5

Find the future value of the annuity due.
-Payments of  $2500\$ 2500$2500  made at the beginning of each semiannual period for 8 years at  4%4 \%4%  compounded semiannually

Accepted Answer

A)    $44,098.21\$ 44,098.21$44,098.21 
B)    $47,530.18\$ 47,530.18$47,530.18 
C)    $23,956.99\$ 23,956.99$23,956.99 
D)    $40,733.54\$ 40,733.54$40,733.54E) A) and B)
F) A) and C)

Question 6

Find the amount that should be invested now to accumulate the following amount, if the money is compounded asindicated.
- $26,100\$ 26,100$26,100  at  5%5 \%5%  compounded annually for  3yr3 \mathrm{yr}3yr

Accepted Answer

A)    $30,214.01\$ 30,214.01$30,214.01 
B)    $3553.84\$ 3553.84$3553.84 
C)    $23,673.47\$ 23,673.47$23,673.47 
D)    $22,546.16\$ 22,546.16$22,546.16E) None of the above
F) A) and D)

Question 7

Solve the problem.
-A bank gives you two options to choose from for your investments:
Option A:  8%8 \%8%  annual interest rate compounded yearly; and
Option B:  7.9%7.9 \%7.9%  annual interest rate compounded quarterly.
Decide which is the better investment at the end of 2 years.

Accepted Answer

A)  O ption A
B)   Option B C) A) and B)
D) undefined

Question 8

Find the lump sum deposited today that will yield the same total amount as this yearly payment (made at the end ofeach year for 20 years at the given interest rate, compounded annually) .
- $400\$ 400$400  at  3%3 \%3%

Accepted Answer

A)    $5947.00\$ 5947.00$5947.00 
B)    $5729.28\$ 5729.28$5729.28 
C)    $6166.00\$ 6166.00$6166.00 
D)    $5951.00\$ 5951.00$5951.00E) None of the above
F) All of the above

Question 9

Solve the problem.
-Find the face value (to the nearest thousand dollars)  of the 30 -year zero-coupon bond at  6.2%6.2 \%6.2%  (compounded semiannually)  with a price of  $8007\$ 8007$8007 .

Accepted Answer

A)    $60,000\$ 60,000$60,000 
B)    $50,000\$ 50,000$50,000 
C)    $60,800\$ 60,800$60,800 
D)    $50,500\$ 50,500$50,500E) A) and C)
F) B) and D)

Question 10

Find the lump sum deposited today that will yield the same total amount as this yearly payment (made at the end ofeach year for 20 years at the given interest rate, compounded annually) .
- $1800\$ 1800$1800  at  6%6 \%6%

Accepted Answer

A)    $21,175.38\$ 21,175.38$21,175.38 
B)    $20,084.58\$ 20,084.58$20,084.58 
C)    $20,637.72\$ 20,637.72$20,637.72 
D)    $20,645.86\$ 20,645.86$20,645.86E) All of the above
F) B) and C)

Question 11

Find the amount that should be invested now to accumulate the following amount, if the money is compounded asindicated.
- $9000\$ 9000$9000  at  6%6 \%6%  compounded semiannually for  4yr4 \mathrm{yr}4yr

Accepted Answer

A)    $7104.68\$ 7104.68$7104.68 
B)    $1895.32\$ 1895.32$1895.32 
C)    $11,400.93\$ 11,400.93$11,400.93 
D)    $7128.84\$ 7128.84$7128.84E) A) and B)
F) A) and C)

Question 12

Find the payment made by the ordinary annuity with the given present value.
- $390,000\$ 390,000$390,000  quarterly payments for 18 years; interest rate is  4.9%4.9 \%4.9%  compounded quarterly.

Accepted Answer

A)    $18,586,976.07\$ 18,586,976.07$18,586,976.07 
B)    $55,902,289.81\$ 55,902,289.81$55,902,289.81 
C)    $45,086,493.32\$ 45,086,493.32$45,086,493.32 
D)    $6,265,695.35\$ 6,265,695.35$6,265,695.35E) None of the above
F) C) and D)

Question 13

Find the monthly payment and estimate the remaining balance (to the nearest dollar) . Assume interest is on the unpaidbalance.
-5 year car loan for  $9900\$ 9900$9900  at  2.85%2.85 \%2.85% ; remaining balance after 4 years.

Accepted Answer

A)    $177.23;$4130\$ 177.23 ; \$ 4130$177.23;$4130 
B)    $532.86;$2031\$ 532.86 ; \$ 2031$532.86;$2031 
C)    $1069.24;$1942\$ 1069.24 ; \$ 1942$1069.24;$1942 
D)    $177.23;$2094\$ 177.23 ; \$ 2094$177.23;$2094E) None of the above
F) B) and C)

Question 14

Find the payment that should be used for the annuity due whose future value is given. Assume that the compoundingperiod is the same as the payment period.
- $48,000\$ 48,000$48,000 ; monthly payments for 12 years; interest rate  8.1%8.1 \%8.1% .

Accepted Answer

A)    $199.03\$ 199.03$199.03 
B)    $196.88\$ 196.88$196.88 
C)    $88.87\$ 88.87$88.87 
D)    $588.93\$ 588.93$588.93E) All of the above
F) A) and B)

Question 15

Find the future value of the loan.
- $700\$ 700$700  loan at  4.25%4.25 \%4.25%  for 7 months

Accepted Answer

A)    $908.25\$ 908.25$908.25 
B)    $722.35\$ 722.35$722.35 
C)    $717.35\$ 717.35$717.35 
D)    $718.93\$ 718.93$718.93E) None of the above
F) A) and C)

Question 16

Find the present value of the ordinary annuity.
-Payments of  $74\$ 74$74  made quarterly for 10 years at  5.7%5.7 \%5.7%  compounded quarterly

Accepted Answer

A)    $2244.38\$ 2244.38$2244.38 
B)    $2259.63\$ 2259.63$2259.63 
C)    $2279.94\$ 2279.94$2279.94 
D)    $2286.79\$ 2286.79$2286.79E) C) and D)
F) B) and D)

Question 17

Find the payment that should be used for the annuity due whose future value is given. Assume that the compoundingperiod is the same as the payment period.
- $118,000\$ 118,000$118,000 ; monthly payments for 8 years; interest rate  9%9 \%9% .

Accepted Answer

A)    $837.44\$ 837.44$837.44 
B)    $289.52\$ 289.52$289.52 
C)    $2501.27\$ 2501.27$2501.27 
D)    $849.80\$ 849.80$849.80E) A) and C)
F) A) and B)

Question 18

Solve the problem. Round to the nearest cent.
-Felipe Rivera's savings account has a balance of  $3067\$ 3067$3067 . After 2 years what will the amount of interest be at  4%4 \%4%  compounded quarterly?

Accepted Answer

A)    $245.12\$ 245.12$245.12 
B)    $254.12\$ 254.12$254.12 
C)    $61.34\$ 61.34$61.34 
D)    $259.12\$ 259.12$259.12E) B) and C)
F) A) and D)

Question 19

Find the present value of the future amount. Assume 365 days in a year. Round to the nearest cent.
- $300\$ 300$300  for 9 months; money earns  2%2 \%2%

Accepted Answer

A)    $4.43\$ 4.43$4.43 
B)    $296.05\$ 296.05$296.05 
C)    $294.12\$ 294.12$294.12 
D)    $295.57\$ 295.57$295.57E) None of the above
F) B) and D)

Question 20

Find the amount of each payment to be made into a sinking fund so that enough will be present to accumulate the following amount. Payments are made at the end of each period. The interest rate given is per period.
- $85,000\$ 85,000$85,000 ; money earns  4.3%4.3 \%4.3%  compounded monthly for  1161 \frac{1}{6}161​  years

Accepted Answer

A)    $2891.40\$ 2891.40$2891.40 
B)    $3003.94\$ 3003.94$3003.94 
C)    $288.67\$ 288.67$288.67 
D)    $5931.28\$ 5931.28$5931.28E) B) and C)
F) All of the above

Exam 5: Mathematics of Finance

Solve the problem. -A bank gives you two options to choose from for your investments: Option A: 8%8 \%8% annual interest rate compounded yearly; and Option B: 7.9%7.9 \%7.9% annual interest rate compounded quarterly. Decide which is the better investment at the end of 2 years.

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Find the interest. Round to the nearest cent. - $790\$ 790$790 at 8.8%8.8 \%8.8% for 10 months

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Find the future value of the ordinary annuity. Interest is compounded annually, unless otherwise indicated. - PMT=$2500,5.1%\mathrm{PMT}=\$ 2500,5.1 \%PMT=$2500,5.1% interest compounded quarterly for 16 years

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Find the lump sum deposited today that will yield the same total amount as this yearly payment (made at the end ofeach year for 20 years at the given interest rate, compounded annually) . - $400\$ 400$400 at 3%3 \%3%

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Find the compound amount for the deposit. Round to the nearest cent. - $110,000\$ 110,000$110,000 at 1.41%1.41 \%1.41% compounded quarterly for 5 years.

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Find the future value of the annuity due. -Payments of $2500\$ 2500$2500 made at the beginning of each semiannual period for 8 years at 4%4 \%4% compounded semiannually

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Find the monthly payment and estimate the remaining balance (to the nearest dollar) . Assume interest is on the unpaidbalance. -5 year car loan for $9900\$ 9900$9900 at 2.85%2.85 \%2.85% ; remaining balance after 4 years.

Correct AnswerverifiedShow Answer

Find the present value of the ordinary annuity. -Payments of $74\$ 74$74 made quarterly for 10 years at 5.7%5.7 \%5.7% compounded quarterly

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Find the present value of the future amount. Assume 365 days in a year. Round to the nearest cent. - $300\$ 300$300 for 9 months; money earns 2%2 \%2%

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Find the amount that should be invested now to accumulate the following amount, if the money is compounded asindicated. - $26,100\$ 26,100$26,100 at 5%5 \%5% compounded annually for 3yr3 \mathrm{yr}3yr

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Solve the problem. -James purchased a bond for $3900\$ 3900$3900 , and sixteen months later he sold it for $4300\$ 4300$4300 . What annual rate would he have to earn in a savings account compounded monthly, to earn the same money on his investment?

Correct AnswerverifiedShow Answer

Find the lump sum deposited today that will yield the same total amount as this yearly payment (made at the end ofeach year for 20 years at the given interest rate, compounded annually) . - $1800\$ 1800$1800 at 6%6 \%6%

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Find the amount that should be invested now to accumulate the following amount, if the money is compounded asindicated. - $9000\$ 9000$9000 at 6%6 \%6% compounded semiannually for 4yr4 \mathrm{yr}4yr

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Find the payment that should be used for the annuity due whose future value is given. Assume that the compoundingperiod is the same as the payment period. - $48,000\$ 48,000$48,000 ; monthly payments for 12 years; interest rate 8.1%8.1 \%8.1% .

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Find the future value of the loan. - $700\$ 700$700 loan at 4.25%4.25 \%4.25% for 7 months

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Solve the problem. Round to the nearest cent. -Felipe Rivera's savings account has a balance of $3067\$ 3067$3067 . After 2 years what will the amount of interest be at 4%4 \%4% compounded quarterly?

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Solve the problem. -Find the face value (to the nearest thousand dollars) of the 30 -year zero-coupon bond at 6.2%6.2 \%6.2% (compounded semiannually) with a price of $8007\$ 8007$8007 .

Correct AnswerverifiedShow Answer

Find the payment made by the ordinary annuity with the given present value. - $390,000\$ 390,000$390,000 quarterly payments for 18 years; interest rate is 4.9%4.9 \%4.9% compounded quarterly.

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Find the payment that should be used for the annuity due whose future value is given. Assume that the compoundingperiod is the same as the payment period. - $118,000\$ 118,000$118,000 ; monthly payments for 8 years; interest rate 9%9 \%9% .

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Solve the problem. -A bank gives you two options to choose from for your investments: Option A: $8 \%$ annual interest rate compounded yearly; and Option B: $7.9 \%$ annual interest rate compounded quarterly. Decide which is the better investment at the end of 2 years.

Correct Answer
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Find the interest. Round to the nearest cent. - $\$ 790$ at $8.8 \%$ for 10 months

Correct Answer
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Find the future value of the ordinary annuity. Interest is compounded annually, unless otherwise indicated. - $\mathrm{PMT}=\$ 2500,5.1 \%$ interest compounded quarterly for 16 years

Correct Answer
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Find the lump sum deposited today that will yield the same total amount as this yearly payment (made at the end ofeach year for 20 years at the given interest rate, compounded annually) . - $\$ 400$ at $3 \%$

Correct Answer
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Find the compound amount for the deposit. Round to the nearest cent. - $\$ 110,000$ at $1.41 \%$ compounded quarterly for 5 years.

Correct Answer
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Find the future value of the annuity due. -Payments of $\$ 2500$ made at the beginning of each semiannual period for 8 years at $4 \%$ compounded semiannually

Correct Answer
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Find the monthly payment and estimate the remaining balance (to the nearest dollar) . Assume interest is on the unpaidbalance. -5 year car loan for $\$ 9900$ at $2.85 \%$ ; remaining balance after 4 years.

Correct Answer
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Find the present value of the ordinary annuity. -Payments of $\$ 74$ made quarterly for 10 years at $5.7 \%$ compounded quarterly

Correct Answer
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Find the present value of the future amount. Assume 365 days in a year. Round to the nearest cent. - $\$ 300$ for 9 months; money earns $2 \%$

Correct Answer
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Find the amount that should be invested now to accumulate the following amount, if the money is compounded asindicated. - $\$ 26,100$ at $5 \%$ compounded annually for $3 \mathrm{yr}$

Correct Answer
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Solve the problem. -James purchased a bond for $\$ 3900$ , and sixteen months later he sold it for $\$ 4300$ . What annual rate would he have to earn in a savings account compounded monthly, to earn the same money on his investment?

Correct Answer
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Find the lump sum deposited today that will yield the same total amount as this yearly payment (made at the end ofeach year for 20 years at the given interest rate, compounded annually) . - $\$ 1800$ at $6 \%$

Correct Answer
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Find the amount that should be invested now to accumulate the following amount, if the money is compounded asindicated. - $\$ 9000$ at $6 \%$ compounded semiannually for $4 \mathrm{yr}$

Correct Answer
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Correct Answer
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Find the payment that should be used for the annuity due whose future value is given. Assume that the compoundingperiod is the same as the payment period. - $\$ 48,000$ ; monthly payments for 12 years; interest rate $8.1 \%$ .

Correct Answer
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Find the future value of the loan. - $\$ 700$ loan at $4.25 \%$ for 7 months

Correct Answer
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Solve the problem. Round to the nearest cent. -Felipe Rivera's savings account has a balance of $\$ 3067$ . After 2 years what will the amount of interest be at $4 \%$ compounded quarterly?

Correct Answer
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Solve the problem. -Find the face value (to the nearest thousand dollars) of the 30 -year zero-coupon bond at $6.2 \%$ (compounded semiannually) with a price of $\$ 8007$ .

Correct Answer
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Find the payment made by the ordinary annuity with the given present value. - $\$ 390,000$ quarterly payments for 18 years; interest rate is $4.9 \%$ compounded quarterly.

Correct Answer
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Find the payment that should be used for the annuity due whose future value is given. Assume that the compoundingperiod is the same as the payment period. - $\$ 118,000$ ; monthly payments for 8 years; interest rate $9 \%$ .

Correct Answer
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