Question 1

You invest $100 each quarter into an annuity earning 8% each quarter. How much do you have at the end of 30 years?

Accepted Answer

A)  $48,826 
B)  $54,582 
C)  $64,651 
D)  $68,461 
A)  $48,826 
B)  $54,582 
C)  $64,651 
D)  $68,461

Question 2

You invest $20 each month into an annuity earning 9.2% each compounded monthly. How much do you have at the end of 15 years?

Accepted Answer

The answer of You invest $20 each month into an...

Question 3

What would be the monthly payment on an add-on loan from a credit union at 8% over 48 months for the principal of $5000?

Accepted Answer

A)  $104.17 
B)  $112.45 
C)  $127.84 
D)  $137.50 
A)  $104.17 
B)  $112.45 
C)  $127.84 
D)  $137.50

Question 4

Which is a more favorable savings rate: 4.5% compounded monthly or 4.6% compounded annually?

Accepted Answer

4.6% compounded annu

Question 5

How much would you have to invest each month in an annuity earning 7.4% monthly to earn $15,000 at the end of 10 years?

Accepted Answer

A)  $84.77 
B)  $98.83 
C)  $146.93 
D)  $152.15 
A)  $84.77 
B)  $98.83 
C)  $146.93 
D)  $152.15

Question 6

You can afford monthly payments of $250, and you find a car dealer offering a 3.9% annual rate compounded monthly on a 5-year loan. Rounded to the nearest $100, what is the most expensive car you can afford?

Accepted Answer

A)  $13,200 
B)  $13,600 
C)  $15,000 
D)  $15,600 
A)  $13,200 
B)  $13,600 
C)  $15,000 
D)  $15,600

Question 7

Find the future value of an annuity with monthly deposits of $75, made over a period of five years, with 9.8% interest compounded monthly.

Accepted Answer

A)  $5777.18 
B)  $7984.39 
C)  $7706.18 
D)  $8254.28 
A)  $5777.18 
B)  $7984.39 
C)  $7706.18 
D)  $8254.28

Question 8

Your Great Aunt Sally loans you $1000 for seven months and asks that you repay it with simple interest at the rate of 1% per month. How much do you repay her after seven months?

Accepted Answer

The answer of Your Great Aunt Sally loans you $1000...

Question 9

If college tuition increases by 4% per year, how does your fourth-year tuition compare with your first-year tuition?

Accepted Answer

A)  about 12.5% more 
B)  about 16% more 
C)  about 17% more 
D)  about 12% more 
A)  about 12.5% more 
B)  about 16% more 
C)  about 17% more 
D)  about 12% more

Question 10

May takes out a conventional loan to purchase a car. The interest rate is 6.8% compounded monthly and May has six years to repay the $10,000 she borrowed. What are May's monthly payments?

Accepted Answer

A)  $95.46 
B)  $139.33 
C)  $169.53 
D)  $290.15 
A)  $95.46 
B)  $139.33 
C)  $169.53 
D)  $290.15

Question 11

Find the future value of an annuity with monthly deposits of $150, made over a period of 10 years, with 5% interest compounded monthly.

Accepted Answer

A)  $13,721 
B)  $23,205 
C)  $23,292 
D)  $30,707 
A)  $13,721 
B)  $23,205 
C)  $23,292 
D)  $30,707

Question 12

Which is more costly: paying 2.5% simple interest for a six-month loan or paying 2.4% monthly compounding interest for six months?

Accepted Answer

The answer of Which is more costly: paying 2.5% simple...

Question 13

Your rich Uncle Ralph is willing to loan you $50,000 for five years, so long as you pay interest each month. He asks for a simple interest rate of 24% per year. How much will you pay each month?

Accepted Answer

A)  $1000 
B)  $2000 
C)  more than $2000 
D)  less than $1000 
A)  $1000 
B)  $2000 
C)  more than $2000 
D)  less than $1000

Question 14

How much would you have to invest each month in an annuity earning 6% monthly to earn $40,000 at the end of 30 years?

Accepted Answer

A)  $14.32 
B)  $36.05 
C)  $39.82 
D)  $40.26 
A)  $14.32 
B)  $36.05 
C)  $39.82 
D)  $40.26

Question 15

Find the future value of an annuity with monthly deposits of $250, made over a period of 30 years, with 6.1% interest compounded monthly.

Accepted Answer

A)  $153,264.36 
B)  $198,328.32 
C)  $231,235.54 
D)  $255,986.36 
A)  $153,264.36 
B)  $198,328.32 
C)  $231,235.54 
D)  $255,986.36

Question 16

A credit card bill shows a balance due of $750 with a minimum payment of $15 and a monthly interest rate of 1.62%. What is the EAR?

Accepted Answer

A)  17.28% 
B)  18.72% 
C)  19.44% 
D)  21.26% 
A)  17.28% 
B)  18.72% 
C)  19.44% 
D)  21.26%

Question 17

Which of these savings rates is most favorable?

Accepted Answer

A)  4% compounded annually 
B)  3.9% compounded monthly 
C)  3.9% compounded quarterly 
D)  3.8% continuously compounded 
A)  4% compounded annually 
B)  3.9% compounded monthly 
C)  3.9% compounded quarterly 
D)  3.8% continuously compounded

Question 18

How much would you have to invest each month in an annuity earning 6% monthly to earn $50,000 at the end of 30 years?

Accepted Answer

The answer of How much would you have to invest...

Question 19

When applying for a loan of the amount of $5000, you received the principal $5000 minus $500 as an interest, but you must pay back the entire principal. What is this type of loan called?

Accepted Answer

The answer of When applying for a loan of the...

Question 20

A credit card statement shows a monthly interest rate of 1.89%. What is the EAR?

Accepted Answer

The answer of A credit card statement shows a monthly...

Exam 22: Borrowing Models

You invest $100 each quarter into an annuity earning 8% each quarter. How much do you have at the end of 30 years?

You invest $20 each month into an annuity earning 9.2% each compounded monthly. How much do you have at the end of 15 years?

What would be the monthly payment on an add-on loan from a credit union at 8% over 48 months for the principal of $5000?

Which is a more favorable savings rate: 4.5% compounded monthly or 4.6% compounded annually?

How much would you have to invest each month in an annuity earning 7.4% monthly to earn $15,000 at the end of 10 years?

You can afford monthly payments of $250, and you find a car dealer offering a 3.9% annual rate compounded monthly on a 5-year loan. Rounded to the nearest $100, what is the most expensive car you can afford?

Find the future value of an annuity with monthly deposits of $75, made over a period of five years, with 9.8% interest compounded monthly.

Your Great Aunt Sally loans you $1000 for seven months and asks that you repay it with simple interest at the rate of 1% per month. How much do you repay her after seven months?

If college tuition increases by 4% per year, how does your fourth-year tuition compare with your first-year tuition?

May takes out a conventional loan to purchase a car. The interest rate is 6.8% compounded monthly and May has six years to repay the $10,000 she borrowed. What are May's monthly payments?

Find the future value of an annuity with monthly deposits of $150, made over a period of 10 years, with 5% interest compounded monthly.

Which is more costly: paying 2.5% simple interest for a six-month loan or paying 2.4% monthly compounding interest for six months?

Your rich Uncle Ralph is willing to loan you $50,000 for five years, so long as you pay interest each month. He asks for a simple interest rate of 24% per year. How much will you pay each month?

How much would you have to invest each month in an annuity earning 6% monthly to earn $40,000 at the end of 30 years?

Find the future value of an annuity with monthly deposits of $250, made over a period of 30 years, with 6.1% interest compounded monthly.

A credit card bill shows a balance due of $750 with a minimum payment of $15 and a monthly interest rate of 1.62%. What is the EAR?

Which of these savings rates is most favorable?

How much would you have to invest each month in an annuity earning 6% monthly to earn $50,000 at the end of 30 years?

When applying for a loan of the amount of $5000, you received the principal $5000 minus $500 as an interest, but you must pay back the entire principal. What is this type of loan called?

A credit card statement shows a monthly interest rate of 1.89%. What is the EAR?

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Social Choice: the Impossible Dream

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