Question

1. Margaret has to buy a car to get to work and school, and she can’t spend more than $580 a month. If she gets a 5-year loan at 6% interest, what is the largest loan that Margaret can get with her price constraint?

A) $20257

B) $34800

C) $25056

D) $30001

2. Jason has applied for a $17000 car loan to be repaid in four years in the form of monthly payments at the end of every month. If the interest rate is 6% per year, how much will Jason’s total monthly payment be?

A) $708

B) $354

C) $799

D) $399

3. Elizabeth borrows $10600 from her bank to buy a new car. If the loan is for four years at 6.0% annual interest and payments are made monthly, how much will her monthly payments be?

A) $445

B) $350

C) $302

D) $249

4. Mark will receive $67000 by way of a distribution from his grandfather’s trust in six years. If the prevailing interest rate is 8.3%, how much is this amount worth to Mark today?

A) $41524

B) $33634

C) $67000

D) $105927

5. After 3 years of compounded interest, you have a total of $5572.24. If the initial investment was $4600, what interest rate is the money earning?

A) 9%

B) 7%

C) 11%

D) 10%

6. John would like to save money to pay for his daughter’s college expenses. He estimates that he will need to accumulate $45500 over the next 10 years. How much will he need to invest at the end of each year for 10 years to achieve his savings goal if he can earn 6percent per year on the investment and he makes end-of-year payments?

A) $3293

B) $2995

C) $3141

D) $3452

Answer 1

Q1) D) $30,001

Explanation:

Using financial calculator to calculate the present value

Inputs: N= 5 × 12 = 60

I/y= 6% / 2 = 0.5%

Pmt= 580

Fv= 0

Pv= compute

We get, the amount of loan as $30,001

Q2) D) $399

Explanation:

Using financial calculator to calculate the monthly payment

Inputs: N= 4 × 12 = 48

I/y= 6% /2 = 0.5%

Pv= -17,000

Fv= 0

Pmt= compute

We get, monthly payment as $399

Q3) D) $249

Explanation:

Using financial calculator to calculate the monthly payment

Inputs: N= 4 × 12 = 48

I/y= 6%/ 2 = 0.5%

Pv= -10,600

Fv= 0

Pmt= compute

We get, monthly payment as $249

Q4) A)41,524

Explanation:

Using financial calculator to calculate the present value

Inputs: N= 6

I/y= 8.3%

Pmt= 0

Fv= 67,000

Pv= compute

We get, present value as $41,524

Q5) B) 7%

Explanation:

Using financial calculator to calculate the interest rate

Inputs: N= 3

Pmt= 0

Fv= 5,572.24

Pv= 4,600

I/y= compute

We get, interest rate as 6.60%

6) D) $3,452

Explanation:

Using financial calculator to calculate the monthly accumulation

Inputs: N= 10

I/y= 6%

Pv= 0

Fv= 45,500

Pmt= compute

We get, monthly savings as $3,452