Exam 3: The Mathematics of Finance

Determine the quarterly payment necessary to accumulate $65,000 in a fund paying 8% per year, compounded quarterly, for 10 years. Assume end-of-period deposits and compounding at the same intervals as deposits. Round the answer to the nearest cent. ​

Determine the periodic payment for a loan of $25,000 borrowed at 6% for 7 years, with monthly payments. Round your answer to the nearest cent. ​

Find the present value of an investment at 3.25% annual simple interest which is worth $6,400 after 5 years. Round your answer to the nearest dollar. ​ $ __________

The nominal rate exceeds the effective rate when the interest is compounded _________ once a year resulting in a larger effective rate. ​

You are offered three investments. What is the best investment ?

Determine the selling price, per $1,000 maturity value, of a 10-year, 4.835% bond, with a yield of 4.87%. (Assume twice-yearly interest payments.) Round your answer to the nearest cent. ​ $__________

Find the present value of a decreasing annuity necessary to fund withdrawals of $2,000 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. ​ $__________

A 6-year bond costs $15,000 and will pay a total of $2,700 in interest over its lifetime. What is its annual interest rate Round answer to the nearest whole number. __________%

Find the present value of the decreasing annuity necessary to fund a withdrawal of $200 per month for 20 years, if the annuity earns 5% per year. (Assume end-of-period deposits and compounding at the same intervals as deposits.) Round your answer to the nearest cent. ​ $P V =$ $ __________.

Inflation is running at 2.4% per year when you deposit $11,000 in an account earning 6.5% 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.]

Given that $F V = 26 t + 650$ , for what interest rate is this the equation of future value (in dollars) as a function of time t (in years) (Round your answer to the nearest 0.1%.)

You deposit $4,000 in an account at the Lifelong Trust Savings and Loan that pays 7% per year compounded quarterly. By how much will your deposit have grown after 5 years Round the answer to the nearest cent. $__________

Calculate, to the nearest cent, the future value of an investment of $12,000 at 4.5% per year, compounded weekly, after 4 years. Assume 52 weeks per year. ​ $ __________

Find the amount accumulated in the increasing annuity of $2,500 deposited quarterly for 25 years at 4% per year. (Assume end-of-period deposits and compounding at the same intervals as deposits.) Round answer to the nearest cent. ​

Find the monthly payment necessary to accumulate $10,000 in an increasing annuity paying 2% per year, with monthly payments for 7 years. (Assume end-of-period deposits and compounding at the same intervals as deposits.) Round your answer to the nearest cent. ​ $__________ per month

Determine the monthly payment necessary to accumulate $40,000 in a fund paying 8% per year, compounded monthly, for 6 years. (Assume end-of-period deposits and compounding at the same intervals as deposits.) Round your answer to the nearest cent. ​ $__________ per month

Calculate, to the nearest cent, the present value of an investment that will be worth $4,000 after 9 years, at 10% per year, compounded annually.