In the problems below show your work clearly. If you use a formula show the formula written with the values substituted into it before giving the final value. If you use the Finance menu on the calculator to do the calculations you must show values that you substitute into it. Also, write your answers to the question in sentence form. Round your answers to the nearest cent or hundredth where appropriate and include units of measure.
1. (7 pts.) Suppose you loan $300 to your brother for six months. You both agree upon an annual interest rate of 12% compounded daily. How much will he have to pay you at the end of the six months? Round your answer to the nearest cent.
2. (7 pts.) Suppose a woman invests $9000 in an account paying 3.5% annual simple interest. How long will it take, in years, before the investment is worth $10,000? Round your answer to the nearest hundredth.
3. (7 pts.) Find the simple interest I earned on the given principal for the time period and annual interest rate specified. Round your answer to the nearest cent.
500,2$=P , %6=r , years 4=t
4. (7 pts.) A woman wants to invest some money now to purchase a new car in three years. How much should she invest today at 7% interest compounded monthly to have $18,000 in three years? Round your answer to the nearest cent.
5. After finishing your college degree, you start a job that has a retirement plan. Suppose that $100 is deposited monthly into your retirement account which earns interest compounded monthly at a 4% annual rate.
a) (7 pts.) How much money will be in the retirement account after 30 years? Round your answer to the nearest cent.
b) (4 pts.) If you wait until 10 years before retirement to start making the deposits, how much will you have to deposit each month to have the same amount at retirement that you found in part A ? (Assume the same interest rate) Round your answer to the nearest cent.
6. Suppose you borrow $25000 to buy a car. You will make monthly payments for 5 years with an interest rate of 7% per year compounded monthly?
a) (7 pts.) What is the monthly payment? Round your answer to the nearest cent.
b) (5 pts.) If you could pay an extra $50 per month, how many years will it take to pay off the loan? Round your answer to the nearest hundredth.
For the multiple choice section of this test, select the best answer by circling the letter choice. No partial credit given. (3 pts. each)
7. After saving $500 for 9 years at a 7% simple interest rate you withdraw $885. How much interest did you make?
a) 7% b) $315 c) $500 d) $385
8. When doing calculations for consumer math (finance), a timespan of 500 weeks converted to years would be
a) 9.59 years b) 41.67 years c) 10.00 years d) 9.62 years
9. Convert 0.04% to decimal form a) 4% b) 0.04 c) 0.004 d) 0.0004
10. Jen Baker wants to purchase a car that costs $21,562 after all of the fees, taxes, etc. She has to make a 10% down payment and finance the rest through a car loan. How much
would the loan be?
a) $19,405.80 b) $2,156.20 c) $21,562.00 d) $21,346.38
11. Mr. Rodriguez has agreed to buy a home with a mortgage (loan) of $256,000. His monthly payments are $1,813.60. After 15 years of payments, the total amount he would pay is
a) $326,448.00 b) $28,404.00 c) $340,848.00 d) $22,723.20
12. When considering a “lump sum” savings plan, in the compound formula the value of nt represents
a) the total amount of money saved. b) the total number of compoundings. c) the total number of years of the savings plan. d) the number of compoundings per year.
13. Suppose you invest $1200 into an account that pays 2.3% interest compounded quarterly. You keep the investment in the account for 13 years. What was the periodic interest rate?
a) 2.3% b) 0.00575% c) 0.575% d) $1616.83 e) $416.83
14. Suppose a man can afford monthly car payments of $380 per month, and his bank is offering a five-year loan at 9.5% interest compounded monthly. How much can he afford
e) none of these
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