Question 1
. Suppose you borrow $5,000 at 7.25% interest for 14 month. What is the maturity value?


.
.
. $5,075
.
.
. $5,422.92
.
.
. $422.92
.
.
. $75
. 

Question 2
. On March 25, you borrow some money for 120 days. What is the maturity date?


.
.
. July 23

.
.
. July 25
.
.
. July 24
.
.
. July 22
. 

Question 3
. Joann gets a 7.5% $1,300 loan on October 25, 2007. If Joann repays the money on April 18, 2008 (a leap year), how much interest does she owe? Assume the lender uses a 365-day year. 

.
.
. $46.75
.
.
. $46.48

.
.
. $47.01
.
.
. $47.28
. 

Question 4
. You borrow $6,000 for 90 days at 6.5% interest. The lender uses a 365-day year. You make a payment of $1,400 on day 36 (36 days after getting the loan). Calculate your balance after the $1,400 payment is applied. 

.
.
. $1,361.53
.
.
. $4,638.47
.
.
. $4,600
.
.
. $4,696.16
. 

Question 5
. You get a 7.5% 60-day $3,000 loan. The lender uses a 365-day year and charges you a $300 set-up fee at the time you get the loan. What is your APR? 

.
.
. 7.5%
.
.
. 8.33%
.
.
. 75.93%
.
.
. 68.33%
. 

Question 6
. You get a loan using the discount method. You sign a note, agreeing to repay the lender $10,000 in 90 days. Assuming a discount rate of 9%, determine the APR. 

.
.
. 9.13%
.
.
. 9.21%
.
.
. 9.34%
.
.
. 9%
. 

Question 7
. You deposited $400 in a savings account 20 years ago, earning 5% compounded quarterly. Today, you withdrew the entire balance of $1,080.59. What is the present value?


.
.
. $400
.
.
. $1080.59
.
.
. $1061.32
.
.
. $512.81
. 

Question 8
. The average growth rate for a certain stock over the last 50 years is reported to be 12% compounded annually. If your grandfather had invested $600 in the stock 50 years ago, what would his investment be worth today? 

.
.
. $234,950.04
.
.
. $962.11
.
.
. $986.78
.
.
. $173,401.31
. 

Question 9
. Jack Townsend is a soda pop “addict” and wonders how much money he could accumulate if he stopped drinking soda pop and deposited the $90 per month he spends on the stuff into a savings plan. If Jack is 20 years old, what amount should he have at retirement, 50 years from now, if he deposited $90 at the end of each month and his savings plan earned 6.75% compounded monthly? 

.
.
. $2,358.50
.
.
. $447,187.52
.
.
. $2,605.43
.
.
. $449,702.95
. 

Question 10
. Tuition at a local college is currently $4,000 per year. If tuition rates are expected to increase at an annual rate of 3%, what will the annual tuition be 19 years from now? 

.
.
. $6,740.64

.
.
. $7,014.02
.
.
. $4,823.50
.
.
. $27,450.05
. 

Question 11
. A corporation issues 25-year $1,000 zero-coupon bonds. If you buy one of these bonds you will receive no interest checks during the 25 years, but will receive the $1,000 maturity value in 25 years. Based on a prevailing 6% annual rate, what price must you pay for one of these bonds? 

.
.
. $262.14
.
.
. $697.98
.
.
. $784.44
.
.
. $233.00
. 

Question 12
. You own a manufacturing business and are considering the purchase of a labor-saving device. You project that the device will last 12 years and save you $750 per month in labor costs (assume that the savings are realized at the end of each month). At the end of 12 years, you project you can sell the device for a salvage value of $12,000. Assuming that you can earn 9% compounded monthly on your money, what is the value of the device? 

.
.
. $1,054,708.83
.
.
. $137,904.63
.
.
. $69,994.92
.
.
. $133,332.79
. 

Question 13
. You want to accumulate $30,000 in 16 years for your child’s education, and you can earn 6% compounded monthly. What amount must you deposit each month if the first of your deposits is made today? 

.
.
. $242.22
.
.
. $92.97
.
.
. $93.43
.
.
. $243.43
. 

Question 14
. You want to start a bicycle repair business and estimate it will take $12,000 to get started. You currently have $3,500 and can deposit an additional $250 at the end of each month. If your savings plan will earn 4% compounded monthly, in how many months can you start your business? 

.
.
. 15.98 months
.
.
. 31.42 months
.
.
. 30.89 months
.
.
. 34 months
. 

Question 15
. Your uncle dies and your 58-year-old aunt receives $120,000 life insurance proceeds. She needs monthly income and expects to live for approximately 28 years. If she invests the insurance money, earning 6.25% compounded monthly, how much can she withdraw at the end of each month?

.
.
. $757.18
.
.
. $4,616.94
.
.
. $3,403.44
.
.
. $7,500
. 

Question 16
. Determine your monthly payment on a 4-year $14,000 car loan at 7.25% interest. 

.
.
. $36.54
.
.
. $3,660.02
.
.
. $336.87
.
.
. $579.09
. 

Question 17
. Determine your monthly payment on a 25-year $125,000 mortgage loan at 7 5/8% interest. 

.
.
. $934.33
.
.
. $9,531.25
.
.
. $930.25
.
.
. $933.93
. 

Question 18
. You are thinking about getting a 40-year $160,000 mortgage loan at 6.75% interest. How much interest would you pay over the 40 years? 

.
.
. $965.37
.
.
. $303,377.60
.
.
. $463,377.60
.
.
. $432,000

. 

Question 19
. Juan and Lisa are getting prequalified for a mortgage loan. Juan earns $3,800 a month; Lisa is a homemaker. Based on the price home they hope to buy, the lender estimates property taxes at $2,450 a year and insurance at $680. Juan has a car payment of $322; Lisa’s car is paid off. They each have a minimum credit card payment of $10. Based on back-end ratio of 41%, what is the maximum monthly payment they qualify for? 

.
.
. $1558.00

.
.
. $955.17
.
.
. $1,297.17
.
.
. $2,242.00
. 

Question 20
. You get a $370,000 mortgage loan at 6.75% with a monthly payment (PI) of $2,399.81. What is your balance after your first payment?

.
.
. $369,681.44
.
.
. $367,600.19
.
.
. $2,081.25
.
.
. $369,544.88
. 

Question 21
. You get a mortgage loan with a monthly payment (PI) of $1,421.48. The lender requires an escrow account. Property taxes are currently $1,418 per year and insurance is currently $598 per year. Calculate your total monthly payment (PITI). 

.
.
. $3,437.48
.
.
. $168.00
.
.
. $2,016.00
.
.
. $1,589.48
. 

Question 22
. You get a 30-year mortgage loan of $185, 000 at 5% interest. You make your first payment on March 1. Use your financial calculator to calculate the calendar-year interest for Year 2. 

.
.
. $9,188.02
.
.
. $9,072.14
.
.
. $7,666.19
.
.
. $9,048.38
. 

Question 23
. You get a 30-year ARM at a rate of 4.625%. The rate is adjusted each year to the 1-year T-bill rate plus ¾%. The loan has a 1% annual cap. One year later the T-bill rate is 5.23%. In 2 years the T-bill rate is 6.44%. What is your interest rate for the third year? 

.
.
. 4.625%
.
.
.
. $57,600
.
. 5.98%
.
.
. 7.19%
.
.
. 6.625%
. 

Question 24
. You apply for a home-equity loan. Your first mortgage has a current balance of $138,400. Based on an appraisal of $245,000 and an 80% LTV ratio, what is the maximum line of credit you can get?

. 

$57,600
$196,000
$106,600
$85,280
.
Question 25
. You get a $290,000 mortgage loan and incur the following loan costs: ½% origination fee, 1¼ points, $75 credit report fee, $550 appraisal fee, $933 title insurance fee, $350 processing fee, $100 closing fee, and $80 for recording. What are your total loan costs? 

.
.
. $5,075
.
.
. $7,163
.
.
. $6,873
.
.
. $7,718