Question 1

Solve the problem. Round to the nearest cent as needed.
-The monthly payments on a $79,000 loan at 14% annual interest are $982.76. How much of the first monthly payment will go toward interest?

Accepted Answer

A)  $921.67 
B)  $845.17 
C)  $137.59 
D)  $1106.00

Question 2

Find the rate of interest required to achieve the conditions set forth.
-If Jay bought a lot for $8,000 and sold it 15 years later for $24,000, what was her percentage rate of return on this investment if it was compounded annually?

Accepted Answer

A)  8.7104% 
B)  9.6825% 
C)  7.5990% 
D)  3.7995%

Question 3

Solve the problem.
-How long will it take for $3000 to grow to $22,600 at an interest rate of 3.1% if the interest is compounded continuously? Round the number of years to the nearest hundredth.

Accepted Answer

A)  6.51 yr 
B)  65.14 yr 
C)  0.65 yr 
D)  6513.99 yr

Question 4

Solve the problem. Round to the nearest cent.
-Larry wants to start an IRA that will have $620,000 in it when he retires in 26 years. How much should he invest semiannually in his IRA to do this if the interest is 6% compounded semiannually?

Accepted Answer

A)  $5094.65 
B)  $3969.83 
C)  $16,081.74 
D)  $5081.65

Question 5

Find i (the rate per period) and n (the number of periods) for the annuity.
-Monthly deposits of $1600 are made for 6 years into an annuity that pays 9% compounded monthly.

Accepted Answer

A)  i = 0.75; n = 12 
B)  i = 0.0075; n = 72 
C)  i = 0.75; n = 6 
D)  i = 0.09; n = 72

Question 6

Solve the problem. Assume that the minimum payment on a credit card is the greater of $27 or 3% of the unpaid balance.
-Find the minimum payment on an unpaid balance of $1584.40.

Accepted Answer

A)  $52.53 
B)  $47.53 
C)  $27.00 
D)  $475.32

Question 7

Solve the problem. Round to the nearest cent as needed.
-A bank has $750,000 to lend for 7 months. It can lend it to a local contractor at a simple interest rate of 12%, or it can lend it to a small business that will pay 12% compounded monthly. If the bank wants to maximize its
Interest earned, who should receive the loan (contractor or business) and what is the additional interest earned?

Accepted Answer

A)  Contractor; $52,500 
B)  Business; $1601.51 
C)  Contractor; $1601.51 
D)  Business; $54,101.51

Question 8

Solve the problem.
-Jennifer invested $6000 in her savings account for 7 years. When she withdrew it, she had $9004.82. Interest was compounded continuously. What was the interest rate on the account? Round to the nearest tenth of a
Percent.

Accepted Answer

A)  5.7% 
B)  5.95% 
C)  5.9% 
D)  5.8%

Question 9

Solve the problem. Round to the nearest cent as needed.
-How long will it take for $8400 to grow to $14,600 at an interest rate of 9.4% if the interest is compounded continuously? Round the number of years to the nearest hundredth.

Accepted Answer

A)  0.59 year 
B)  0.06 year 
C)  5.88 years 
D)  58.81 years

Question 10

Solve the problem. Round to the nearest cent as needed.
-An actuary for a pension fund need to have $14.6 million grow to $22 million in 6 years. What interest rate compounded annually does he need for this investment to growth as specified. Round your answer to the
Nearest hundredth of a percent.

Accepted Answer

A)  0.07% 
B)  7% 
C)  7.7% 
D)  7.07%

Question 11

Find the compound amount for the deposit. Round to the nearest cent.
-$1100 at 3% compounded quarterly for 2 years

Accepted Answer

A)  $1116.56 
B)  $1167.76 
C)  $1166.99 
D)  $1166.00

Question 12

Convert the given interest rate to decimal form if it is given as a percentage, and to a percentage if it is given in decimal
 form.
-0.05 to percent

Accepted Answer

A)  0.0005% 
B)  50% 
C)  0.05% 
D)  5%

Question 13

Use the average daily balance method to compute the amount of interest that will be charged at the end of the billing
 cycle. Use a 365-day year.
-Month: April (30 days) Previous month's balance: $960
Interest rate: 21%

Accepted Answer

A)  $14.93 
B)  $14.07 
C)  $11.61 
D)  $17.50

Question 14

Find i (the rate per period) and n (the number of periods) for the loan at the given annual rate.
-Annual payments of $378.80 are made for 8 years to repay a loan at 6.4% compounded annually.

Accepted Answer

A)  i = 0.064; n = 8 
B)  i = 0.00533; n = 12 
C)  i = 0.064; n = 16 
D)  i = 0.008; n = 8

Question 15

Convert the given interest rate to decimal form if it is given as a percentage, and to a percentage if it is given in decimal
 form.
-0.25 to percent

Accepted Answer

A)  0.0025% 
B)  25% 
C)  2.5% 
D)  2.25%

Question 16

Solve the problem.
-You can afford monthly deposits of $200 into an account that pays 8% compounded monthly. How many
months will it be until you have $15,000 to buy a car? (Round up to the next higher month if not an integer.)

Accepted Answer

The answer of Solve the problem.
-You can afford monthly deposits...

Question 17

Use the average daily balance method to compute the amount of interest that will be charged at the end of the billing
 cycle. Use a 365-day year.
-Month: May (31 days) Previous month's balance: $960
Interest rate: 19%

Accepted Answer

A)  $7.88 
B)  $12.35 
C)  $11.31 
D)  $8.76

Question 18

Find i (the rate per period) and n (the number of periods) for the annuity.
-Semiannual deposits of $400 are made for 10 years into an annuity that pays 7% compounded semiannually.

Accepted Answer

A)  i = 0.07; n = 10 
B)  i = 0.035; n = 20 
C)  i = 0.35; n = 10 
D)  i = 0.0175; n = 40

Question 19

Use the future value formula to find the indicated value. Round to three decimal places.
-n = 10; i = 0.02; PMT = $1; FV = ?

Accepted Answer

A)  $10.95 
B)  $60.95 
C)  $12.169 
D)  $9.755

Question 20

Provide an appropriate response.
-If you pay $5,500 for a simple interest note that will be worth $6,000 in 21 months, what annual simple interest
rate will you earn? (Compute the answer to one decimal place.)

Accepted Answer

The answer of Provide an appropriate response.
-If you pay $5,500...

Exam 3: Additional Derivative Topics

Solve the problem. Round to the nearest cent as needed. -The monthly payments on a $79,000 loan at 14% annual interest are $982.76. How much of the first monthly payment will go toward interest?

Find the rate of interest required to achieve the conditions set forth. -If Jay bought a lot for $8,000 and sold it 15 years later for $24,000, what was her percentage rate of return on this investment if it was compounded annually?

Solve the problem. -How long will it take for $3000 to grow to $22,600 at an interest rate of 3.1% if the interest is compounded continuously? Round the number of years to the nearest hundredth.

Solve the problem. Round to the nearest cent. -Larry wants to start an IRA that will have $620,000 in it when he retires in 26 years. How much should he invest semiannually in his IRA to do this if the interest is 6% compounded semiannually?

Find i (the rate per period) and n (the number of periods) for the annuity. -Monthly deposits of $1600 are made for 6 years into an annuity that pays 9% compounded monthly.

Solve the problem. Assume that the minimum payment on a credit card is the greater of $27 or 3% of the unpaid balance. -Find the minimum payment on an unpaid balance of $1584.40.

Solve the problem. -Jennifer invested $6000 in her savings account for 7 years. When she withdrew it, she had $9004.82. Interest was compounded continuously. What was the interest rate on the account? Round to the nearest tenth of a Percent.

Solve the problem. Round to the nearest cent as needed. -How long will it take for $8400 to grow to $14,600 at an interest rate of 9.4% if the interest is compounded continuously? Round the number of years to the nearest hundredth.

Solve the problem. Round to the nearest cent as needed. -An actuary for a pension fund need to have $14.6 million grow to $22 million in 6 years. What interest rate compounded annually does he need for this investment to growth as specified. Round your answer to the Nearest hundredth of a percent.

Find the compound amount for the deposit. Round to the nearest cent. -$1100 at 3% compounded quarterly for 2 years

Convert the given interest rate to decimal form if it is given as a percentage, and to a percentage if it is given in decimal form. -0.05 to percent

Use the average daily balance method to compute the amount of interest that will be charged at the end of the billing cycle. Use a 365-day year. -Month: April (30 days) Previous month's balance: $960 Interest rate: 21%

Find i (the rate per period) and n (the number of periods) for the loan at the given annual rate. -Annual payments of $378.80 are made for 8 years to repay a loan at 6.4% compounded annually.

Convert the given interest rate to decimal form if it is given as a percentage, and to a percentage if it is given in decimal form. -0.25 to percent

Solve the problem. -You can afford monthly deposits of $200 into an account that pays 8% compounded monthly. How many months will it be until you have $15,000 to buy a car? (Round up to the next higher month if not an integer.)

Use the average daily balance method to compute the amount of interest that will be charged at the end of the billing cycle. Use a 365-day year. -Month: May (31 days) Previous month's balance: $960 Interest rate: 19%

Find i (the rate per period) and n (the number of periods) for the annuity. -Semiannual deposits of $400 are made for 10 years into an annuity that pays 7% compounded semiannually.

Use the future value formula to find the indicated value. Round to three decimal places. -n = 10; i = 0.02; PMT = $1; FV = ?

Provide an appropriate response. -If you pay $5,500 for a simple interest note that will be worth $6,000 in 21 months, what annual simple interest rate will you earn? (Compute the answer to one decimal place.)