INSTRUCTION: Shade the letter of your choice to each item. Erasures are considered WRONG. [1] If you borrow $3,000 at 6% simple interest per year for seven years, how flow series is equivalent to a third series, which is a uniform gradient series. [12] A bank advertises mortgages at 12% compounded continuously. What is much will you have to repay at the end of seven years? What is the value of G for this third series over the same five-year time the effective annual interest? [A] $3,000 interval? [A] 12.36% [B] $4,511 [A] $994 [B] 12.55% [C] $1,260 [B] $1,150 [C] 12.75% [D] $1,511 [C] $1,250 [D] 12.68% [E] $4,260 [D] $1,354 [E] 12.00% [E] Not enough information given [2] When you were born, your grandfather established a trust fund for you in [13] If you invest $7,000 at 12% compounded continuously, how much would it the Cayman Islands. The account has been earning interest at the rate of [7] Bill Mitselfik borrowed $10,000 to be repaid in quarterly installments over be worth in three years? 10% per year. If this account will be worth $100,000 on your 25th birthday, the next five years. The interest rate he is being charged is 12% per year [A] $9,449 how much did your grandfather deposit on the day you were born? compounded quarterly. What is his quarterly payment? [B] $4,883 [A] $4,000 [A] $400 [C] $10,033 [B] $9,230 [B] $550 [D] $9,834 [C] $10,000 [C] $650 [E] $2,520 [D] $10,150 [D] $800 [E] $10,740 [14] On a $200,000, 30-year fixed mortgage, the monthly payment will be [8] Sixty monthly deposits are made into an account paying 6% nominal approximately how much when the nominal interest rate on the mortgage [3] Every year you deposit $2,000 into an account that earns 2% interest per interest compounded monthly. If the objective of these deposits is to is 4.2%? year. What will be the balance of your account immediately after the 30th accumulate $100,000 by the end of the fifth year, what is the amount of [A] $568 deposit? each deposit? [B] $980 [A] $44,793 [A] $1,930 [C] $918 [B] $60,000 [B] $1,478 [D] $1,000 [C] $77,385 [C] $1,667 [E] $895 [D] $81,136 [D] $1,430 [E] $82,759 [E] $1,695 [15] Adding a small amount to your monthly home mortgage payment will shorten the life of your loan. Adding $10 per month to your $540 monthly [4] Your monthly mortgage payment (principal plus interest) is $1,500. If you [9] What is the principal remaining after 20 monthly payments have been mortgage payment will trim how many months from a 30 year, 5% have a 30-year loan with a fixed interest rate of 0.5% per month, how much made on a $20,000 five-year loan? The annual interest rate is 12% nominal mortgage of $100,000? Select the closest answer. did you borrow from the bank to purchase your house? Select the closest compounded monthly. [A] 25 months answer. [A] $10,224 [B] 19 months [A] $154,000 [B] $13,333 [C] 13 months [B] $180,000 [C] $14,579 [D] 6 months [C] $250,000 [D] $16,073 [D] $300,000 [E] $17,094 [16] Suppose a friend of yours invests $100 each month in an individual [E] $540,000 retirement account (IRA) for a decade and earns an unbelievable APR of [10] If you borrow $5,000 to buy a car at 12% compounded monthly, to be 12% a year (1% per month) on her investment. She will end up with $100 [5] Consider the following sequence of year-end cash flows repaid over the next four years, what is your monthly payment? (F/A, 1%, 120)=$100 (230.0387)=$23,003.87 after 10 years. If you decide to [A] $131 invest $200 each month over 10 years, but can earn only a meager APR of [B] $137 3% per year on it, roughly how much will you have accumulated after 10 [C] $1,646 years? Choose the closest answer. [D] $81 [A] $19,000 What is the uniform annual equivalent if the interest rate is 12% per year? [E] $104 [B] $24,000 [A] $20,422 [C] $28,000 [B] $17,511 [11] The effective annual interest rate is given to be 19.2%. What is the nominal [D] $46,000 [C] $23,204 interest rate per year (r) if continuous compounding is being used? Choose [D] $22,000 the closest answer below. [E] $12,422 [A] 19.83% -END OF TEST- [B] 18.55% [6] A cash flow at time zero (now) of $9,982 is equivalent to another cash flow [C] 17.56% that is an EOY annuity of $2,500 over five years. Each of these two cash- [D] 16.90%