Deck 3: Mathematics of Finance

Question 1

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:

-11.6% to decimal

A) 0.116
B) 116
C) 11.6
D) 0.00116

Answer 1

0.116

Question 2

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 decimal

A) 5.0
B) 0.0005
C) 0.5
D) 0.05

Answer 2

0.0005

Question 3

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

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

Answer 3

5%

Question 4

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

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

Question 5

Make the indicated conversion. Assume a 360-day year as needed:

-150 days to a simplified fraction of year

A)
B)
C)
D)

Question 6

Make the indicated conversion. Assume a 360-day year as needed:

-8 months to simplified fraction of a year

A)
B)
C)
D)

Question 7

Use I = Prt for simple interest to find the indicated quantity:

-P = $22,660; r = 13%; 2.4 years. Find I.

A) $2945.80
B) $15,590.08
C) $7069.92
D) $29,729.92

Question 8

Use I = Prt for simple interest to find the indicated quantity:

-P = $13,500; t = 4 months; I = $517.50. Find r.

A) 7.7%
B) 3.8%
C) 11.5%
D) 11.7%

Question 9

Use the formula A = P(1 + rt) to find the indicated quantity:

-P = $7996; r = 6%; t = 10 months. Find A.

A) $8475.76
B) $6663.33
C) $8395.80
D) $399.80

Question 10

Use the formula A = P(1 + rt) to find the indicated quantity:

-Allan borrowed $ 5500 from his father to buy a car. He repaid him after 8 months with interest of 7% per year. Find the total amount he repaid.

A) $ 256.67
B) $ 5756.67
C) $ 5724.58
D) $ 5885.00

Question 11

Use the formula A = P(1 + rt) to find the indicated quantity:

-A = $16,400; r = 10%; 90 days. Find P.

A) $400.00
B) $16,810
C) $16,400
D) $16,000

Question 12

Solve the problem. Round dollar amounts to the nearest cent. Use 360 days.

-Polson Associates bought a new computer system. To pay for the system, they borrowed from the bank at interest for 130 days. Find the simple interest.

A) $1315.31
B) $3670.63
C) $1307.35
D) $1325.50

Question 13

The principal $15,400 is accumulated with simple interest of 16% for 5 years.

A) $27,720
B) $15,892.80
C) $12,320
D) $20,212.50

Question 14

Solve the problem. Assume that simple interest is being calculated in each case. Round your answer to the nearest cent:

-John Lee's savings account has a balance of $ 3965. After 27 months, what will the amount of interest be at 0.3% per year?

A) $ 38.90
B) $ 26.76
C) $ 146.85
D) $ 11.90

Question 15

An investor purchased 150 shares of a stock at $15.80 per share. The investor holds the stock for 39 weeks and then sells the stock for $19.25 per share. Use the commission schedule for this company given below to find the annual rate of interest earned by this investor. Express your answer as a percentage, correct to one decimal place.

Question 16

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: July (31 days)
Previous month's balance: $ 840
Interest rate: 16%

A) $ 9.94
B) $ 8.54
C) $ 8.47
D) $ 8.75

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: $ 950
Interest rate: 18%

A) $ 7.55
B) $ 8.40
C) $ 11.82
D) $ 10.84

Question 18

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: February (28 days)
Previous month's balance: $ 1250
Interest rate: 22%

A) $ 8.38
B) $ 19.86
C) $ 16.09
D) $ 18.35

Question 19

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%

A) $ 17.62
B) $ 14.16
C) $ 15.03
D) $ 11.69

Question 20

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 $1456.38.

A) $48.69
B) $27.00
C) $436.91
D) $43.69

Question 21

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 $769.52.

A) $28.09
B) $23.09
C) $230.86
D) $27.00

Question 22

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

-If the annual interest rate is 15.99%, find the difference between the minimum payment and the interest owed on an unpaid balance of $728.97 that is 1 month overdue.

A) $17.29
B) $14.29
C) $12.76
D) $12.22

Question 23

Find the compound interest earned. Round to the nearest cent:

-$700 at 8% compounded semiannually for 4 years

A) $118.90
B) $595.65
C) $252.34
D) $258.00

Question 24

Find the compound interest earned. Round to the nearest cent:

-$600 at 5% compounded quarterly for 1 years

A) $95.45
B) $204.06
C) $46.43
D) $95.82

Question 25

Find the compound interest earned. Round to the nearest cent:

-$14,000 at 5% compounded annually for 3 years

A) $2206.75
B) $701.50
C) $1435.00
D) $2100.00

Question 26

Find the compound amount for the deposit. Round to the nearest cent:

-$ 200 at 7% compounded quarterly for 5 years

A) $ 270.00
B) $ 282.96
C) $ 280.51
D) $ 218.12

Question 27

Find the compound amount for the deposit. Round to the nearest cent:

-$1100 at 3% compounded quarterly for 2 years

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

Question 28

Find the compound amount for the deposit. Round to the nearest cent:

-$15,000 at 10% compounded semiannually for 10 years

A) $38,906.14
B) $39,799.47
C) $30.000.00
D) $24,433.42

Question 29

How long will it take for $ 9500 to grow to $ 35,400 at an interest rate of 10.1% if the interest is compounded continuously? Round the number of years to the nearest hundredth.

A) 1.3 yr
B) 0.13 yr
C) 13.02 yr
D) 1302.4 yr

Question 30

Jennifer invested in her savings account for 4 years. When she withdrew it, she had . Interest was compounded continuously. What was the interest rate on the account? Round to the nearest tenth of a percent.

A) 5.85%
B) 5.6%
C) 5.7%
D) 5.8%

Question 31

What is the annual percentage yield (APY) for money invested at the given annual rate? Round results to the nearest hundredth of a percent:

-5% compounded semiannually

A) 5.13%
B) 5.09%
C) 5.00%
D) 5.06%

Question 32

What is the annual percentage yield (APY) for money invested at the given annual rate? Round results to the nearest hundredth of a percent:

-3.5% compounded continuously.

A) 3.55%
B) 3.56%
C) 3.53%
D) 3.50%

Question 33

What is the annual percentage yield (APY) for money invested at the given annual rate? Round results to the nearest hundredth of a percent:

-6% compounded quarterly

A) 6.18%
B) 6.09%
C) 6.00%
D) 6.14%

Question 34

Samantha's savings account has a balance of $4643. After 25 years, what will the amount of interest be at 6% compounded annually?

A) $15,289.16
B) $15,284.16
C) $2785.80
D) $15,275.16

Question 35

The rabbit population in a forest area grows at the rate of 7% monthly. If there are 180 rabbits in July, find how many rabbits (rounded to the nearest whole number) should be expected by next July. Use

A) 408
B) 428
C) 402
D) 415

Question 36

Cheraw Auto Repair believes that it will need new equipment in 10 years. The equipment will cost $26,000. What lump sum should be invested today at 8% compounded semiannually, to yield $26,000?

A) $17,637.61
B) $17,462.98
C) $11,866.06
D) $21,097.18

Question 37

The bacteria in a 11-liter container double every 3 minutes. After 55 minutes the container is full. How long did it take to fill a quarter of the container?

A) 13.8 min
B) 27.5 min
C) 49 min
D) 41.3 min

Question 38

A bank account starts with $1,000 in it. Interest is paid at 6% annual interest, compounded monthly. Graph the exact function for the amount in the account over the first 12 months. Use vertical scale

Question 39

Use the future value formula to find the indicated value. Round to three decimal places:

-n = 15; i = 0.04; PMT = $1; FV = ?

A) $ 18.292
B) $ 21.825
C) $ 20.024
D) $ 45.024

Question 40

Use the future value formula to find the indicated value. Round to three decimal places:

-n = 13; i = 0.04; PMT = $1000; FV = ?

A) $41,627.144
B) $16,627.838
C) $18,292.371
D) $15,026.247

Question 41

Find the future value of the ordinary annuity. Interest is compounded annually, unless otherwise indicated:

-PMT = $7,500, i = 7% interest compounded semiannually for 4 years

A) $ 131,254.61
B) $ 58,345.56
C) $ 67,887.65
D) $ 282,173.37

Question 42

Find the periodic payment that will render the sum:

-FV = $ 42,000, interest is 8% compounded monthly, payments made at the end of each month for 3 years

A) $ 3373.51
B) $ 1036.13
C) $ 2213.19
D) $ 12,433.54

Question 43

Larry wants to start an IRA that will have $ 400,000 in it when he retires in 22 years. How much should he invest semiannually in his IRA to do this if the interest is 9% compounded semiannually?

A) $ 3019.28
B) $ 11,018.26
C) $ 3032.28
D) $ 2889.93

Question 44

Cara needs $9,000 in 6 years. What amount can she deposit at the end of each quarter at 6% interest compounded quarterly so she will have her $9,000?

A) $ 1290.26
B) $ 299.37
C) $ 314.32
D) $ 330.58

Question 45

Find the rate of interest required to achieve the conditions set forth:

-A = $ 32,000
P = $8,000
T = 20 years
Compounded annually

A) 5.6467%
B) 8%
C) 3.5265%
D) 7.1773%

Question 46

Find the rate of interest required to achieve the conditions set forth:

-A = $ 32,000
P = $8,000
T = 20 years
Compounded quarterly

A) 3.4959%
B) 3.5489%
C) 5.5310%
D) 6.9919%

Question 47

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?

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

Question 48

Solve for the missing value. Round to four decimal places:

-_{n = 33; i = 0.05; PMT = $1; PV = ?}

A) $ 15.8027
B) $ 16.0025
C) $ 16.1929
D) $ 23.9975

Question 49

Solve for the missing value. Round to four decimal places:

-n = 30; i = 0.03; PMT = $100; PV = ?

A) $2000.0441
B) $4706.6287
C) $1918.1585
D) $1960.0441

Question 50

Find the present value of the ordinary annuity:

-Payments of $ 65 made quarterly for 10 years at 8% compounded quarterly

A) $ 1789.81
B) $ 638.18
C) $ 1748.67
D) $ 1778.11

Question 51

Find the payment necessary to amortize the loan:

-$ 12,200; 12% compounded monthly; 48 monthly payments

A) $ 321.27
B) $ 1470.38
C) $ 321.50
D) $ 316.16

Question 52

Find the payment necessary to amortize the loan:

-$2200; 12% compounded quarterly; 8 quarterly payments

A) $313.40
B) $442.87
C) $313.64
D) $282.23

Question 53

The monthly payments on a $73,000 loan at 13% annual interest are $807.38. How much of the first monthly payment will go toward the principal?

A) $702.42
B) $16.55
C) $790.83
D) $104.96

Question 54

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?

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

Question 55

Use an amortization table to solve the problem. Round to the nearest cent.

-The monthly payments on a $73,000 loan at 13% annual interest are $807.38. How much of the first monthly payment will go toward the principal?

A) $702.42
B) $790.83
C) $104.96
D) $16.55

Question 56

Use an amortization table to solve the problem. Round to the nearest cent.

-The monthly payments on a $76,000 loan at 12% annual interest are $836.76. How much of the first monthly payment will go toward interest?

A) $100.41
B) $912.00
C) $736.35
D) $760.00

Question 57

Solve the problem. Assume no new purchases are made with the credit card.

-The annual interest rate on a credit card is 16.99%. If a payment of $100.00 is made each month, how long will it take to pay off an unpaid balance of $1746.42?

A) 15 months
B) 23 months
C) 21 months
D) 20 months