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ES411-ENGG ECONOMY | QUIZ NO.

2 | 7/21/2017 NAME: ________________________________________ SCORE: ______________


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%

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