Question

17. Visa Card and other credit card issuers must by law print the Annual Percentage Rate(APR) on their monthly statements. If the APR is stated to be 24.00%, with interest paid monthly, what is the card's EAR%?

A. 18.58%.

B. 19.56%.

C. 25.44%.

D. 21.57%.

E. None of the above.

18. You estimate that you will need about $80,000 to send your child to college in eight years. You have about $35,000 now. At what rate will you just reach your goal?

A. 11.28%

B. 10.88%

C. 9.85%

D. 12.14%

E. None of the above.

19. A client plans to retire in 15 years and will need to withdraw $50,000 from his retirement account each year for 10 years, beginning on the day he retires. After that, he will need to withdraw $20,000 per year for 25 years. The account returns 4% annually. The amount he needs to have in the account on the day he retires is closest to:

A. $580,000.

B. $640,000.

C. $655,000.

D. $670,000.

E. None of the above.

20. Three years from now, an investor will deposit the first of eight $1,000 payments into a special fund. The fund will earn interest at the rate of 5% per year until the third deposit is made. Thereafter, the fund will return a reduced interest rate of 4% compounded annually until the final deposit is made. How much money will the investor have in the fund at the end of ten years assuming no withdrawals are made?

A. $8,872.93.

B. $9,251.82.

C. $9,549.11.

D. Cannot be determined.

E. None of the above.

Answer 1

The answers are as follows: