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Final Test (sample) - Code 1

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Final Test (sample) - Code 1

Uploaded by

anhplm.yec23
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Final Test (sample) – Code 1

1. An accountant wants to withdraw $3000 from an investment at the beginning of each quarter
for the next 15 years. How much must be deposited originally if the investment earns 6%,
compounded quarterly? Assume that after the 15 years, the balance is zero.
2. A couple borrowed $97,000 at 7.2%, compounded monthly, for 25 years to purchase a
condominium.
(a) Find their monthly payment.
(b) Over the 25 years, how much interest will they pay?
3. Suppose that a 10-year corporate bond has a maturity value of $10,000 and a coupon rate of
10%, with coupons paid semiannually. Find the market price of the bond if the current yield rate
is 6% compounded semiannually. Is this bond selling at a discount or at a premium?
4. A collector made a $10,000 down payment for a classic car and agreed to make 18 quarterly
payments of $1500 at the end of each quarter. If money is worth 8%, compounded quarterly,
how much would the car have cost if the collector had paid cash?
5. If $1500 is deposited at the end of each half-year in a retirement account that earns 8.2%,
compounded semiannually, how long will it be before the account contains $500,000?
6. Grandparents plan to establish a college trust for their youngest grandchild. How much is
needed now so the trust, which earns 6.4%, compounded quarterly, will provide $4000 at the
end of each quarter for 4 years after being deferred for 10 years?
7. A debt of $3000 with interest at 10%, compounded monthly, is amortized by 12 monthly
payments (of equal size). What is the size of each payment?
8. $200,000 borrowed at 8% compounded monthly for 20 years. After 2 years of regular payments,
the borrower decides to pay $2000 per month.
(a) How many more payments must be made?
(b) How much would this save over the life of the loan?
9. A woman buys a car for $40,000. If the interest rate on the loan is 12%, compounded monthly,
and if she wants to make monthly payments of $700 for 3 years, how much must she have for a
down payment?
10. What payment must be put in an account at the end of each quarter to establish an ordinary
annuity that has a future value of $50,000 in 14 years, if the investment pays 12%, compounded
quarterly?

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