Name Student #MULTIPLE CHOICE or SHORT OUESTIONS For M/C: Must show all calculation steps, but half...

Question

Name Student #MULTIPLE CHOICE or SHORT OUESTIONS For M/C: Must show all calculation steps, but half marks are assigned to correct answers if no calculation steps given. For short questions: must show ALL calculation steps to receive the full marks.1) You invest $8500 in a savings account that pays interest of 4.8% compounded monthly. What is 1) the value of your account after 19 months? (2 marks) A) $9119.79 B) $9219.79 C) $9999.79 D) $9669.79 E $9169.792) You have an investment that will mature in 20 months with the value of $2500. You need some 2) quick cash and decide to sell it today at a discount rate of 10% compounded quarterly. What is the cash value? (2 marks) A) $2009.63 B) $2219.63 C) $2299.63 D) $659.23 E) $2120.543) You owe $4510 due in 7 months. In addition you owe $3780 due in 13 months and $5125 due in 21 3) months. You are paying 8.64% compounded monthly on your loan. What single amount three months from now will pay off the entire loan of the three future payments? (2 marks) A) $12444.86 B) $12404.86 C) $12040.86 D) $12440.86 E) $12884.86 tr!)\A ,v) ¦ -2; 3 t ----- (---'''-- _____---- , uo 71'4) A loan of 44500.00 was repaid together with interest of $1164.00. If interest was 12 .4% 4) compounded quarterly, for how many months was the loan taken out? (2 marks)5) Find the equated date at which two payments of $1600.00 due six months ago and 51850.00 due today could be settled by a payment of $4300.00 if interest is 9.48% compounded monthly. (3 marks)5)6) In how many days will 5770.00 grow to $880.00 at 11.5% p.a. compounded monthly? 6) (2 marks)7) At what nominal rate of interest compounded quarterly will $2000.00 earn $400.00 interest in three years? (2 marks)

David · Accepted Answer

Solution 1:
We have P = 8500, I = 4.8%/12 = 0.004 and n = 19
Amount after 19 months
A = P (1 + I) n 
    = 8500 (1.004)19 
    = 8500 (1.078799)
    = $9,169.79
Solution 2:
We have P = 2500, I = 10%/4 = 2.5% and n = 20/4 = 5
Cash value would be
A = P (1 + I) n
2500 = P (1.025)5
2500 = P (1.1314)
P = 2500/1.1314 = $2219.63
Solution 3:
PV of 4510 = 4510 (PVIFA @ 0.0072, 4) = $4382.42
PV of 3780 = 3780 (PVIFA @ 0.0072, 10) = $3518.31
PV of 5125 = 5125 (PVIFA @ 0.0072, 18) = $3518.31
Total = $4382.42 + $3518.31 + $3518.31 = $12404.86
Solution 4:
Amount = $4500 + 1164 = $5664
A = P (1 + I) n
5664 = 4500 (1 + 12.4%/4) n
1.25867 = (1.031)n
Taking log both sides, we get
Log (1.25867) = n log (1.031)
n = 7.54*4 = 30 months
Solution 5:
$4,300 = $1600 (PVIFA @ 9.48%/12, 6) + 1850 (PVIF @ 9.48%/12, n) 
4300 = 1600 (PVIFA @ 0.0079, 6) + 1850 (PVIF @ 0.0079, n)
4300 = 1600 (5.8375) + 1850 (PVIF @ 0.0079, n)
2.7244 = 1/ (1.0079) n 
n = 127.37
Solution 6:
FV = PV (1 + i)^n
880 = 770 (1 + 11.5%/12)^n
1.1429 = 1.00958^n
Taking log both sides, we get
n = 0.13353/0.00954 = 14
Solution 7: 
FV = PV (1 + i)^n
2000 = 400 (1 + i/4)^36
51/36 = (1 + i/4)
1.1435 = 1 + i/4
I/4 = 0.1435 or 14.35%
Solution 8:
 PV = A (PVIFA @ I, n) 
15000 = A (PVIFA @ 1%, 60) 
15000 = A (44.955)
A = 15000/44.955 = $333.67 
Solution 9: 
FV = A (FVIFA @ I, n) 
122200 = A (FVIFA @ 5.7%/12, 72) 
122200 = A (60.8582)
A = 122200/60.8582 = $2007.95
Solution 10: 
a) PV = A (PVIFA @ 7.28%/12, 7*12)
PV = 1320 (PVIFA @ 0.0061%, 84)
     = 1320*65.66
     = 86671.47 
b) Amount paid = 1320*84 – 86671.47 = $24,208.53
c) Interest = 86671.47*0.0061 = $525.81
Solution 11:
a) We have A = 3350, I = 7.84%/2 = 3.92% and n = 3*2 = 6
PV = A (PVIFA @ I, n)
     = 3350 (PVIFA @ 3.92%, 6)
      = 3350 (5.2558)
      = $17,606.99
Solution 12:
Down payment = $160,000 x 25% = $40,000
Amount of loan = $160,000 - $40,000 = $120,000
PV = A (PVIFA @ 6%/12, 25*12)
120,000 = A (PVIFA @ 0.5%, 300)
120,000 = A (155.21)
A = $773.16 
Solution 13:
PV = A (PVIFA @ I, n)
50,000 = 1000 (PVIFA @ 9%/12, n)
50 = (PVIFA @ 0.75%, n)
n = 62.9 ~ 63
Solution 14: 
We have PMT = 715, I = 8.36%/4 = 2.09% and n = 7*4 = 28
PV = PMT (PVIFA @ I, n)
     = 715 (PVIFA @ 2.09%, 28)
     = 715 (21.035)
PMT = 15040.18 
Solution 15:
We have PMT = 2600, PV = 360,000, I = 7.5%/2 = 3.

Name Student # MULTIPLE CHOICE or SHORT OUESTIONS For M/C: Must show all calculation steps, but half marks are assigned to correct answers if no calculation steps given. For short questions: must show...

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