Deck 10: Financial Mathematics: Money Matters

Question 1

You purchase a condominium after graduation from college. Each year the assessed value of the condominium increases by 5%. After five years, what is the total percentage increase on the assessed value of the condominium? Give your answer as a percentage rounded to the nearest tenth of a percent.

Answer 1

27.6%

Question 2

Your university charges an annual tuition of $8200. If you agree to take part in a work-study program, your annual tuition is only $7600. What is the percentage decrease in the tuition if you take part in the work-study program? Give your answer as a percentage rounded to the nearest tenth of a percent.

Answer 2

7.3%

Question 3

The local Rent-to-Own Store offers you the following plan to purchase a living room set. The living room set retails for $1650, but you will have four years to pay it off using a simple interest loan. If you pay back $1975, then what was the APR on this loan? Give your answer as a percentage rounded to
the nearest tenth of a percent.

Answer 3

4.9%

Question 4

Starting at the age of 25, at the end of each month, you invest $200 into a retirement IRA (individual retirement account). The IRA guarantees an APR of 6% compounded monthly for the life of the account. How much money will you have in the account when you turn 65? Give your answer as a decimal rounded to the nearest hundredth.

Question 5

After selling a bunch of your old "junk" on e-bay, you've made quite a bit of money. You deposit the money into a brand new savings account which offers an annual percentage rate of 6¾% compounded daily. You forget about the account and five years later find that it contains $18,300. How much money did you originally deposit into the account? Give your answer as a decimal rounded to the nearest hundredth.

Question 6

Suppose that you have a coupon which offers a price reduction of 10% plus one of the following options.
Option 1: Add an extra 5% to your coupon for a total discount of 15%.
Option 2: Add a price reduction of $8 to your coupon after removing the 10%.
Is one option always better than the other option? Explain.

Question 7

After selling a bunch of your old "junk" on e-bay, you have $500. You deposit the money into a savings account which offers an annual percentage rate of 6¾% compounded daily. What is the future value of the account after 3 years? Give your answer as a decimal rounded to the nearest hundredth.

Question 8

When you were born your grandmother purchased a low-risk government savings bond for $2500. The bond pays 4.75% annual simple interest. Determine the future value of the bond after eighteen years. Give your answer as a decimal rounded to the nearest hundredth.

Question 9

Bill and Seth decide to purchase a new home. The purchase price of the home is $185,000. Bill and Seth have decided to make a down payment of 15% and finance the remaining amount with a 30-year home mortgage loan with an annual percentage rate of 4.15% compounded monthly. Compute Bill and Seth's monthly mortgage payment under this loan. Give your answer as a decimal rounded to the nearest hundredth.

Question 10

Suppose that you have a coupon which offers a price reduction of 10% plus one of the following options.
Option 1: Add an extra 5% to your coupon for a total discount of 15%.
Option 2: Add a price reduction of $8 to your coupon after removing the 10%.
Is one option always better than the other option? Explain.

Question 11

When you were born your grandmother purchased a low-risk government savings bond for $1250. The bond pays 5.25% annual simple interest. Determine the future value of the bond after seven years. Give your answer as a decimal rounded to the nearest hundredth.

Question 12

Your university charges an annual tuition of $18200. You agree to take part in a work-study program, and your annual tuition is reduced by 12%. What will be your reduced annual tuition? Give your answer as a decimal rounded to the nearest hundredth.

Question 13

The local Rent-to-Own Store offers you the following plan to purchase a washing machine. The washing machine retails for $850, but you will have three years to pay it off using a simple interest loan. If you pay back $1400, then what was the APR on this loan? Give your answer as a percentage rounded to the nearest tenth of a percent.

Question 14

You purchase a new car after graduating from college. Each year the assessed value of the car decreases by 10%. After five years, what is the total percentage decrease on the value of the car? Give your answer as a percentage rounded to the nearest tenth of a percent.

Question 15

You have recently come across a rather large amount of money. Because you have just finished the financial math lectures in your college math class, you decide that you should invest the money in a long term CD (certificate of deposit). The financial section of your local paper has the following advertisements.
Countryside Credit Union
- 10 year CD with an APR of 5.44 % compounded monthly.
Northeast Bank and Trust
- 10 year CD with an APR of 5.43 % compounded continuously.
Which institution is offering a better deal? Explain.

Question 16

An electronics store purchases a certain video game from the manufacturer, but in a mass amount of clutter the original purchase price is lost. The store sells the game at a mark-up of 120% over the purchase price. A coupon which the store offers in the local newspaper will reduce the price by 20%. With the coupon, the profit made on the sale of the video game is $5.76. What was the original purchase price of the video game? Give your answer as a decimal rounded to the nearest hundredth.

Question 17

Starting at the age of 20, at the end of each month, you invest $250 into a retirement IRA (individual retirement account). The IRA guarantees an APR of 3% compounded monthly for the life of the account. How much money will you have in the account when you turn 55? Give your answer as a decimal rounded to the nearest hundredth.

Question 18

Emily and Matt, and their many dogs and cats, decide to purchase a new home. The purchase price of the home is $235,000. Emily and Matt have decided to make a down payment of 10% and finance the remaining amount with a 30-year home mortgage loan with an annual percentage rate of 4.25% compounded monthly. Compute Emily and Matt's monthly mortgage payment under this loan. Give your answer as a decimal rounded to the nearest hundredth.

Question 19

You have recently come across a rather large amount of money. Because you have just finished the financial math lectures in your college math class, you decide that you should invest the money in a long-term CD (certificate of deposit). The financial section of your local paper has the following advertisements.
Countryside Credit Union
- 10 year CD with an APR of 5.44 % compounded monthly.
Northeast Bank and Trust
- 10 year CD with an APR of 5.43 % compounded continuously.
Which institution is offering a better deal? Explain.

Question 20

An electronics store purchases a certain video game from the manufacturer for $18 per unit. The store sells the game at a mark-up of 120% over the purchase price. You found a coupon, offered in the local newspaper, which will reduce the price by 20%. How much money would the store profit if you purchased the video game using the coupon? Give your answer as a decimal rounded to the nearest
hundredth.

Question 21

Federal Savings Bank is offering a 6-month CD (certificate of deposit) with an annual percentage rate of 6.3% compounded continuously. What is the equivalent annual percentage rate compounded annually or APY (annual percentage yield) on the CD? Give your answer as a percentage rounded to the nearest hundredth of a percent.

A) 6.28%
B) 6.32%
C) 6.50%
D) 6.53%
E) None of the above.

Question 22

The local Rent-to-Own Store offers you the following plan to purchase a bedroom set. The bedroom room set retails for $2350, but you will have two years to pay it off using a simple interest loan. If you pay back $2560, then what was the APR on this loan? Give your answer as a percentage rounded to the nearest tenth of a percent.

A) 4.5%
B) 4.9%
C) 5.2%
D) 5.6%
E) None of the above.

Question 23

You purchase a new car after graduating from college. Each year the assessed value of the car decreases by 6%. After five years, what is the total percentage decrease on the value of the car? Give
Your answer as a percentage rounded to the nearest tenth of a percent.

A) 25.0%
B) 26.6%
C) 30.0%
D) 33.4%
E) None of the above.

Question 24

A shirt is marked off by 30% and you also have a cupon that allows you to take another 20% off ofthe sale price . id you purchased the shirt for 10$ , then what was the original price prior to the 30% mark-down?

A) $14.67
B) $16.86
C) $17.86
D) $166.67
E) None of the above.

Question 25

Miah and Lisa, and their two dogs, decide to purchase a new home. The purchase price of the home is $320000. Miah and Lisa have decided to make a down payment of 30% and finance the remaining amount with a 15-year home mortgage loan with an annual percentage rate of 3.15% compounded monthly. Compute Miah and Lisa's monthly mortgage payment under this loan. Give your answer as a decimal rounded to the nearest hundredth.

A) $1007.26
B) $1256.84
C) $1493.95
D) $1563.11
E) None of the above.

Question 26

At the end of each month you deposit $250 into an account which earns an annual percentage rate of 6% compounded monthly. How much money will you have in the account after 40 years? Give your answer as a decimal rounded to the nearest hundredth.

A) $120000.00
B) $315473.28
C) $497872.68
D) $589545.27
E) None of the above.

Question 27

An electronics store purchases a certain video game from the manufacturer for $10 per unit. The store sells the game at a mark-up of 80% over the purchase price. You found a coupon, offered in the local newspaper, which will reduce the price by 10%. How much money would the store profit if you purchased the video game using the coupon? Give your answer as a decimal rounded to the nearest hundredth.

A) $6.20
B) $8.50
C) $4.40
D) $7.70
E) None of the above.

Question 28

After some questionable activity during your college's annual homecoming party, your friends need to bail you out of jail. A bail bondsman loans your friends $5000 with the condition that they will repay the loan along with 15¼ % annual simple interest. After six months you go to pay the loan, how much will you owe? Give your answer as a decimal rounded to the nearest hundredth.

A) $5123.50
B) $5381.25
C) $8932.75
D) $9575.00
E) None of the above.

Question 29

Bill and Seth have decided to open a 30-year home mortgage loan with an annual percentage rate of 3.80% compounded monthly. If the home costs $240,000.00 and Bill and Seth agree to pay a 10% down-payment up front, then compute Bill and Seth’s monthly mortgage payment. Give your answer as a decimal rounded to the nearest hundredth.

A) $880.13
B) $912.15
C) $942.13
D) $1006.47
E) None of the above.

Question 30

Starting at the age of 30, at the end of each month, you invest $540 into a retirement IRA (individual retirement account). The IRA guarantees an APR of 9% compounded monthly for the life of the account. How much money will you have in the account when you turn 65? Give your answer as a decimal rounded to the nearest hundredth.

A) $504000.00
B) $1588563.62
C) $1708965.24
D) $1974965.87
E) None of the above.

Question 31

After several sleepless nights of on-line poker you've made quite a bit of money. You deposit the money into a brand new savings account which offers an annual percentage rate of 5¾% compounded weekly. You forget about the account and five years later find that it contains $20200. How much money did you originally deposit into the account? Give your answer as a decimal rounded to the nearest hundredth.

A) $14252.23
B) $15252.15
C) $18214.15
D) $15155.17
E) None of the above.

Question 32

After several sleepless nights of on-line poker you've made $4000. You deposit the money into a brand new savings account which offers an annual percentage rate of 5¾% compounded daily. How much will you have in the account after five years? Give your answer as a decimal rounded to the nearest hundredth.

A) $5026.85
B) $5332.24
C) $5475.43
D) $6117.92
E) None of the above.

Question 33

The local Rent-to-Own Store offers you the following plan to purchase a washing machine. The washing machine retails for $675, but you will have three years to pay it off using a simple interest Loan. If you pay back $950, then what was the APR on this loan? Give your answer as a percentage
Rounded to the nearest tenth of a percent.

A) 9.1%
B) 10.4%
C) 13.6%
D) 16.2%
E) None of the above.

Question 34

After some questionable activity during your college's annual homecoming party, your friends need to bail you out of jail. A bail bondsman loans your friends $8000 with the condition that they will repay the loan along with 25¾% annual simple interest. After eight months you go to pay the loan, how much will you owe? Give your answer as a decimal rounded to the nearest hundredth.

A) $8135.15
B) $8137.33
C) $9621.76
D) $9648.00
E) None of the above.

Question 35

Your university charges an annual room and board fee of $4200. You choose the deluxe meal program, so your room and board fee is increased by 15%. What will be your increased room and board fee? Give your answer as a decimal rounded to the nearest hundredth.

A) $4626.00
B) $4750.00
C) $4830.00
D) $5052.00
E) None of the above.

Question 36

Federal Savings Bank is offering a 6-month CD (certificate of deposit) with an annual percentage rate of 4.5% compounded daily. What is the equivalent annual percentage rate compounded annually or APY (annual percentage yield) on the CD? Give your answer as a percentage rounded to the nearest tenth of a percent.

A) 4.7%
B) 4.8%
C) 4.9%
D) 5.0%
E) None of the above.

Question 37

An electronics store purchases a certain video game from the manufacturer, but in a mass amount of clutter the original purchase price is lost. The store sells the game at a mark-up of 200% over the purchase price. A coupon which the store offers in the local newspaper will reduce the price by 20%. With the coupon, the profit made on the sale of the video game is $18. What was the original purchase price of the video game? Give your answer as a decimal rounded to the nearest hundredth.

A) $8.00
B) $16.25
C) $12.45
D) $12.86
E) None of the above.

Question 38

Your university charges an annual tuition of $9600. If you agree to take part in a work-study program, your annual tuition is only $8200. What is the percentage decrease in the tuition if you take part in the Work-study program? Give your answer as a percentage rounded to the nearest tenth of a percent.

A) 9.7%
B) 11.8%
C) 13.1%
D) 14.6%
E) None of the above.

Question 39

You purchase a five-year savings bond. The value of the increases by 5% each year. After five years, what is the total percentage increase from the bond's initial value? Give your answer as a percentage rounded to the nearest tenth of a percent.

A) 25.0%
B) 25.8%
C) 27.6%
D) 28.4%
E) None of the above.

Question 40

A store offers a coupon which allows one item to receive a price reduction of 50% off the original price. As a valued shopper, you are also given the option of discounting the reduced price by 10% or
Taking $10 off of the reduced price. Taking $10 off as opposed to the 10% discount off of the reduced Price would be a good idea for which of the following original prices?

A) $100
B) $200
C) $300
D) $400
E) None of the above.