Exam 3: The Mathematics of Finance

Inflation is running at 2.1% per year when you deposit $11,000 in an account earning 6.1% per year compounded quarterly. In constant dollars, how much money will you have 4 years from now Round your answer to the nearest cent. [Hint: First calculate the value of your account in 4 year's time, and then find its present value based on the inflation rate.] $ __________

Find the simple interest on a $3,000 investment made for 5 years at an interest rate of 4% per year. What is the future value INT = $ __________ FV = $ __________

Find the simple interest on a $3,000 investment made for 10 years at an interest rate of 5% per year. What is the future value ?

Find the present value of the decreasing annuity necessary to fund a withdrawal of $100 per month for 20 years, if the annuity earns 3% per year. (Assume end-of-period deposits and compounding at the same intervals as deposits.) Round your answer to the nearest cent. ​

You deposit $1,500 in an account at the Lifelong Trust Savings and Loan that pays 6% per year compounded quarterly. By how much will your deposit have grown after 8 years Round the answer to the nearest cent. ?

Find the simple interest on a $20,600 investment made for 6 months at an interest rate of 8% per year. What is the future value Round your answer to the nearest ten.

If Brazil has an annual inflation rate of 11% and an item will cost 125,000 reals in 3 years, what does the same item cost now Round to the nearest real. ?

Calculate, to the nearest 0.1%, what annual interest rate would be required if you invested $6,000 in Apple stock and ended up with $11,264 when you sold the stock after 9 years Assume that interest was compounded quarterly. The required annual interest rate is __________%.

A two-year bond has a maturity value of $5,000 and will pay a total of $1,750 interest over its lifetime. What is the annual interest rate rounded to the nearest 0.1% r = __________ %

A $6,000 loan, taken now, with a simple interest rate of 9% per year, will cost a total of $9,240. How many years until the loan matures (Round your answer to the nearest whole year.) t = __________ years

Find the amount accumulated in an increasing annuity in which $100 is deposited monthly for 20 years at 5% per year in an account containing $10,000 at the start. (Assume end-of-period deposits and compounding at the same intervals as deposits.) Round your answer to the nearest cent. ​

Find the present value of the decreasing annuity necessary to fund a withdrawal of $1,300 per quarter for 20 years, if the annuity earns 3% per year. (Assume end-of-period deposits and compounding at the same intervals as deposits.) Round your answer to the nearest cent. ​ $P V =$ $ __________.

Find the effective annual interest rate of 11% compounded monthly. Round your answer to the nearest 0.01%.

Calculate the future value of an investment of $14,000 at 5.5% per year, compounded weekly, after 6 years. Assume 52 weeks per year. ​

When I was considering what to do with my $8,000 Lottery winnings, my broker suggested I invest half of it in gold, whose value was growing by 12% per year, and the other half in certificates of deposit (CDs), which were yielding 9% per year compounded every 6 months. Assuming that these rates are sustained, how much will my investment be worth in 7 years Round your answer to the nearest cent. ?

Determine the monthly payment necessary to accumulate $30,000 in a fund paying 6% per year, compounded monthly, for 8 years. Assume end-of-period deposits and compounding at the same intervals as deposits. Round the answer to the nearest cent. ​

Calculate, to the nearest cent, the present value of an investment that will be worth $2,000 after 17 years, at 4% per year, compounded annually. ​ ​PV​ = $__________

While shopping for a car loan, you get the following offers: Solid Savings & Loan is willing to loan you $25,000 at 13% interest for 5 years. Fifth Federal Bank & Trust will loan you the $25,000 at 7% for 6 years. Both require monthly payments. You can afford $500 per month. Which loan, if either, can you take

When I was considering what to do with the $9,000 proceeds from my sale of technology stock, my broker suggested I invest half of it in municipal bonds, whose value was growing by 12% per year, and the other half in certificates of deposit (CDs), which were yielding 3% per year compounded every 2 months. Assuming that these rates are sustained, how much will my investment be worth in 12 years Round your answer to the nearest cent. $ __________

A 8-year bond costs $10,000 and will pay a total of $2,400 in interest over its lifetime. What is its annual interest rate