Question 1

Find the sum of the first 12 terms of the geometric series 5 - 20 + 80 - 320 + ...

Accepted Answer

A) 16,777,217 
B) none of these 
C) 27,962,025 
D) - 16,777,215 
E) - 27,962,025 
A) 16,777,217 
B) none of these 
C) 27,962,025 
D) - 16,777,215 
E) - 27,962,025 D

Question 2

Find the present value of $450 in the six years' time if the discount rate is 9.5% compounded semi- annually. Round your answer to two decimal places.

Accepted Answer

A) $261.05 
B) $151.44 
C) $187.45 
D) $257.85 
E) $193.24 
A) $261.05 
B) $151.44 
C) $187.45 
D) $257.85 
E) $193.24 D

Question 3

A project requires an initial investment of $7,000, and is guaranteed to yield a return of $1,500 at the end of the first year, $2,500 at the end of the second year and $x at the end of the third year. Find the value of x, correct to the nearest $, given that the net present value is $838.18 when the interest rate is 6% compounded annually.

Accepted Answer

A) $4,500 
B) $5,500 
C) $4,050 
D) $5,000 
E) $5,250 
A) $4,500 
B) $5,500 
C) $4,050 
D) $5,000 
E) $5,250 D

Question 4

A principal of $7,650 is invested at a rate of 3.7% compounded annually. After how many years will the investment first exceed $12,250?

Accepted Answer

A) 16 
B) 14 
C) 15 
D) 13 
E) 12 
A) 16 
B) 14 
C) 15 
D) 13 
E) 12

Question 5

Determine the present value of an annuity if it pays out $2,500 at the end of each year in perpetuity, assuming that the interest rate is 8% compounded annually.

Accepted Answer

A) $24,550 
B) $34,050 
C) $31,250 
D) $29,450 
E) $30,100 
A) $24,550 
B) $34,050 
C) $31,250 
D) $29,450 
E) $30,100

Question 6

The table below gives the annual rate of inflation during a five- year period. $$\begin{array} { | l | l | l | l | l | l | } 
\hline & 2000 & 2001 & 2002 & 2003 & 2004 \
\hline \text { Annual rate of inflation } & 1.8 \% & 2.1 \% & 29 \% & 2.4 \% & 2.7 \% \
\hline
\end{array}$$ If a nominal house price at the end of 2000 was $10.8 million, find the real house price adjusted to prices prevailing at the end of the year 2003. Round your answer to three significant figures.

Accepted Answer

A) $10.9 million 
B) $9.9 million 
C) $11.8 million 
D) $10.0 million 
E) $11.6 million 
A) $10.9 million 
B) $9.9 million 
C) $11.8 million 
D) $10.0 million 
E) $11.6 million

Question 7

Determine the monthly repayments needed to repay a $125,000 loan which is paid back over 20 years when the interest rate is 7% compounded annually. Round your answer to two decimal places.

Accepted Answer

A) $1,078.39 
B) $1,172.24 
C) $893.86 
D) $983.26 
E) $971.79 
A) $1,078.39 
B) $1,172.24 
C) $893.86 
D) $983.26 
E) $971.79

Question 8

A principal of $70,000 is invested at 6% interest for four years. Find the difference in the future value if the interest is compounded quarterly compared to continuous compounding. Round your answer to two decimal places.

Accepted Answer

A) $158.45 
B) $614.05 
C) $256.65 
D) $620.43 
E) $469.93 
A) $158.45 
B) $614.05 
C) $256.65 
D) $620.43 
E) $469.93

Question 9

A proposed investment costs $130,000 today. The expected revenue flow is $40,000 at the end of year 1, and $140,000 at the end of year 2. Find the internal rate of return, correct to one decimal place.

Accepted Answer

A) 17.8% 
B) 20.3% 
C) 20.0% 
D) 19.9% 
E) 18.4% 
A) 17.8% 
B) 20.3% 
C) 20.0% 
D) 19.9% 
E) 18.4%

Question 10

During 2005 the price of a good increased by 8%. In the sales on January 1st 2006, all items are reduced by 25%. If the sale price of the good is $688.50, find the original price at the beginning of 2005.

Accepted Answer

A) $935 
B) $850 
C) $558 
D) $2,395 
E) $925 
A) $935 
B) $850 
C) $558 
D) $2,395 
E) $925

Find the sum of the first 12 terms of the geometric series 5 - 20 + 80 - 320 + ...

Find the present value of $450 in the six years' time if the discount rate is 9.5% compounded semi- annually. Round your answer to two decimal places.

A principal of $7,650 is invested at a rate of 3.7% compounded annually. After how many years will the investment first exceed $12,250?

Determine the present value of an annuity if it pays out $2,500 at the end of each year in perpetuity, assuming that the interest rate is 8% compounded annually.

Determine the monthly repayments needed to repay a $125,000 loan which is paid back over 20 years when the interest rate is 7% compounded annually. Round your answer to two decimal places.

A principal of $70,000 is invested at 6% interest for four years. Find the difference in the future value if the interest is compounded quarterly compared to continuous compounding. Round your answer to two decimal places.

A proposed investment costs $130,000 today. The expected revenue flow is $40,000 at the end of year 1, and $140,000 at the end of year 2. Find the internal rate of return, correct to one decimal place.

During 2005 the price of a good increased by 8%. In the sales on January 1st 2006, all items are reduced by 25%. If the sale price of the good is $688.50, find the original price at the beginning of 2005.

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Exam 3: Mathematics of Finance

Find the sum of the first 12 terms of the geometric series 5 - 20 + 80 - 320 + ...

Find the present value of $450 in the six years' time if the discount rate is 9.5% compounded semi- annually. Round your answer to two decimal places.

A principal of $7,650 is invested at a rate of 3.7% compounded annually. After how many years will the investment first exceed $12,250?

Determine the present value of an annuity if it pays out $2,500 at the end of each year in perpetuity, assuming that the interest rate is 8% compounded annually.

Determine the monthly repayments needed to repay a $125,000 loan which is paid back over 20 years when the interest rate is 7% compounded annually. Round your answer to two decimal places.

A principal of $70,000 is invested at 6% interest for four years. Find the difference in the future value if the interest is compounded quarterly compared to continuous compounding. Round your answer to two decimal places.

A proposed investment costs $130,000 today. The expected revenue flow is $40,000 at the end of year 1, and $140,000 at the end of year 2. Find the internal rate of return, correct to one decimal place.

During 2005 the price of a good increased by 8%. In the sales on January 1st 2006, all items are reduced by 25%. If the sale price of the good is $688.50, find the original price at the beginning of 2005.

Linear Equations

Non-Linear Equations

Differentiation

Partial Differentiation

Integration

Matrices

Linear Prgamming

Dynamics

Filters