Question 1

You have a savings account into which you invest $100 at the end of every month and the account pays you an APR of 6% compounded monthly. Use the regular deposits balance formula to determine the balance in the account at the end of 3 years.

Accepted Answer

A)  $3816.00
B)  $3933.61
C)  $3515.67
D)  $2918.75 B

Question 2

What is the present value of an investment that will be worth $5000 at the end of ten years assuming an APR of 8% compounded monthly?

Accepted Answer

A)  $4678.57
B)  $3356.05
C)  $1921.79
D)  $2252.62 D

Question 3

Suppose you buy a two-year $7500 CD at an APR of 6.75% compounded monthly. How much interest will you be paid by the end of the period?

Accepted Answer

A)  $8580.78
B)  $1012.50
C)  $1080.78
D)  $858.08 C

Question 4

Your nest egg can provide a monthly income of $4000 for 20 years. If you want 15-years annuity rather than 20-years annuity, what will be the monthly income from the same amount of nest egg? Assume an APR of 6%.

Accepted Answer

A)  $4711.4
B)  $5125.6
C)  $5367.7
D)  $6000.0

Question 5

Suppose you want to borrow a principal of $450,000 for a term of 25 years at an APR of 5.5%. Then the monthly payment would be at least:

Accepted Answer

A)  $2062.50
B)  $2475.00
C)  $1500.00
D)  $990.00

Question 6

Suppose you invest $5000 in a savings account that pays an APR of 4%. If the interest is compounded monthly, what is the balance in the account after 10 years?

Accepted Answer

A)  $5203.71
B)  $8072.64
C)  $7454.16
D)  $5169.19

Question 7

Find the 5-year inflation rate in the United States from December 2008 to December 2013.

Accepted Answer

A)  10.40%
B)  10.50%
C)  10.85%
D)  10.94%

Question 8

You begin your retirement savings at age 40. You plan on retiring at age 65. How much would you need to deposit each month into a savings account with an APR of 6% compounded monthly if your goal is a nest egg of $150,000?

Accepted Answer

A)  $302.48
B)  $216.45
C)  $279.83
D)  $199.37

Question 9

If you only make your credit card's minimum payment, then your balance will decrease very slowly and will follow an exponential pattern.

Accepted Answer

A) True 
 B)False

Question 10

Below is the 2010 Tax Table for Singles.  In 2010 Alexa was single and had a total income of $36,000. She took a deduction of $5000 and had a tax credit of $1250. Calculate the tax owed by Alexa.

Accepted Answer

A)  $4231.25
B)  $4043.75
C)  $2981.25
D)  $4462.50

Question 11

A simplified formula for the amount on a credit card subject to finance charges is:

Accepted Answer

A)  Previous balance + Payments - Purchases
B)  Previous balance - Payments + Purchases
C)  Payments + Purchases - Previous balance
D)  Payments - Purchases - Previous balance

Question 12

How much do you need to deposit each month for three years into a savings account that pays 6.5% APR in order to buy a car that costs $25,000?

Accepted Answer

A)  $613.78
B)  $630.81
C)  $635.55
D)  $654.24

Question 13

You want to save $30,000 for a down payment on a home by making regular monthly deposits over four years. If the APR is 7%, how much money do you need to deposit each month?

Accepted Answer

A)  $543.39
B)  $419.04
C)  $668.08
D)  $625.00

Question 14

Suppose at age 25 you begin putting $300 a month into a cookie jar until you retire at age 65. At age 65, you begin to withdraw $2000 a month out of the cookie jar. How long will this retirement fund last?

Accepted Answer

A)  72 months
B)  60 months
C)  48 months
D)  144 months

Question 15

Suppose the buying power of the dollar decreases by 6.7% this year. What is the rate of inflation this year?

Accepted Answer

A)  6.3%
B)  6.7%
C)  7.6%
D)  7.2%

Question 16

Assume you take out a $3000 loan for 12 months at 8.5% APR. What percentage of the first month's payment is interest?

Accepted Answer

A)  6.15%
B)  6.82%
C)  7.47%
D)  8.12%

Question 17

The Rule of 72 states that the estimate for doubling time = _______________ .

Accepted Answer

A)   
B)   
C)   
D)

Question 18

Inflation rate is measured by the percentage change in the CPI.

Accepted Answer

A) True 
 B)False

Question 19

You have a balance of $15,000 for your tuition on your American Express credit card. If your APR is 21%, you make no further charges, and each month you make only the minimum payment of 3% of your balance, then the formula for the balance after t monthly payments is given by 15,000(0.986975)t . What will the balance be after 10 years?

Accepted Answer

A)  $4043.03
B)  $3768.92
C)  $3150.00
D)  $3110.50

Question 20

Suppose the rate of inflation this year is 4.5%. What is the percentage decrease in the buying power of a dollar?

Accepted Answer

A)  4.3%
B)  4.5%
C)  4.7%
D)  4.9%

Exam 4: Personal Finance

You have a savings account into which you invest $100 at the end of every month and the account pays you an APR of 6% compounded monthly. Use the regular deposits balance formula to determine the balance in the account at the end of 3 years.

What is the present value of an investment that will be worth $5000 at the end of ten years assuming an APR of 8% compounded monthly?

Suppose you buy a two-year $7500 CD at an APR of 6.75% compounded monthly. How much interest will you be paid by the end of the period?

Your nest egg can provide a monthly income of $4000 for 20 years. If you want 15-years annuity rather than 20-years annuity, what will be the monthly income from the same amount of nest egg? Assume an APR of 6%.

Suppose you want to borrow a principal of $450,000 for a term of 25 years at an APR of 5.5%. Then the monthly payment would be at least:

Suppose you invest $5000 in a savings account that pays an APR of 4%. If the interest is compounded monthly, what is the balance in the account after 10 years?

Find the 5-year inflation rate in the United States from December 2008 to December 2013.

You begin your retirement savings at age 40. You plan on retiring at age 65. How much would you need to deposit each month into a savings account with an APR of 6% compounded monthly if your goal is a nest egg of $150,000?

If you only make your credit card's minimum payment, then your balance will decrease very slowly and will follow an exponential pattern.

Below is the 2010 Tax Table for Singles. In 2010 Alexa was single and had a total income of $36,000. She took a deduction of $5000 and had a tax credit of $1250. Calculate the tax owed by Alexa.

A simplified formula for the amount on a credit card subject to finance charges is:

How much do you need to deposit each month for three years into a savings account that pays 6.5% APR in order to buy a car that costs $25,000?

You want to save $30,000 for a down payment on a home by making regular monthly deposits over four years. If the APR is 7%, how much money do you need to deposit each month?

Suppose at age 25 you begin putting $300 a month into a cookie jar until you retire at age 65. At age 65, you begin to withdraw $2000 a month out of the cookie jar. How long will this retirement fund last?

Suppose the buying power of the dollar decreases by 6.7% this year. What is the rate of inflation this year?

Assume you take out a $3000 loan for 12 months at 8.5% APR. What percentage of the first month's payment is interest?

The Rule of 72 states that the estimate for doubling time = _______________ .

Inflation rate is measured by the percentage change in the CPI.

Suppose the rate of inflation this year is 4.5%. What is the percentage decrease in the buying power of a dollar?