1. A savings plan requires 48 deposits of $402 per month commencing today. If the interest rate is 13.9% p.a compounding monthly, the value of the investment plan in exactly 4 years from today will be closest to:

a.

$25913.23

b.

$25616.51

c.

$2250.00

d.

$1975.42

2.

You owe your parents $13,000 (in present day dollars) and want to repay them in equal amounts the first to occur in 3 years from today and the other in 7 years from today. If the interest rate is 12.5% per annum compounding monthly, what will be the amount of each repayment?

a.

$11739

b.

$18879

c.

$31045

d.

$18510

3.

You are given the equation below.

Which of the following statements is CORRECT?

Select one:

A.

The equation will indicate the future value of an annuity due of 10 payments at the end of the 10th period.

B.

The equation will work where I make 10 annual payments commencing today and I wish to know the value at the end of 10 years.

C.

The equation will indicate the future value of an annuity of 10 payments, immediately before the 10th payment

D.

None of the above are correct.

4. $8,000 is invested at 6%p.a compounding semi-annually for the first 2 years and at 13% p.a compounding quarterly for the following 4 years. What is the future value at the end of 6 years? (round to nearest dollar; don't include $ sign or commas)

5.

A sinking fund is set up so that level annual payments will accumulate, at i %p.a compounding annually, to $50,000 in 10 years. Assuming the payments made are at each year-end, after exactly 5 years the sinking fund will be:

[Note: a sinking fund allows for money to be set aside by periodical deposits in order to accumalte an amout to e.g replace equipment or repay debt due at a future date]

Select one:

a.

Less than $25,000

b.

Greater than $25,000

c.

Equal to $25,000

6.

Which of the following is CORRECT? When discounting an amount to be received in one years time at a rate that is quoted as 12% compounding quarterly, we can:

Select one:

A.

Discount the amount using an effective monthly rate of 1% where the number of periods is 12.

B.

Discount the amount using an effective annual rate (EAR) of (1+0.01)^12-1 =12.6825% where number of periods is 1.

C.

Discount the amount using the annual rate of 12% where number of periods is 1.

D.

Discount the amount using the effective quarterly rate of 3% where the number of discount periods is 4.

7. If money is invested for 3 years, the per annum simple interest rate equivalent to a nominal rate of 9.0%p.a compounding monthly is (as a percentage rounded to three decimal places; dont use % sign):

8.

An advertised investment product promises to pay $469 per month for 43 months commencing in 1 month from today. If the investment earns 6.8% p.a compounding monthly, how much will the investment product cost today? (round to nearest cent; dont use $ sign or commas)

a.

$17853.33

b.

$17954.50

c.

$1448.48

d.

$1546.97

9.

You inherit $493,000. You can receive the $493,000 in one lump sum payment today or, alternatively, receive two amounts: $293,000 in 10 months and $220,000 in 21 months from today. If you can earn 5.5% per annum compounding monthly on your monies, what is the value of the option to receive two payments (in present day value)?

(to nearest whole dollar,; dont use $ sign or commas)

10. You invest $3,000 and earn $561 over 20 months. What nominal rate of annual interest (compounding monthly) did you earn? (expressed as a percentage to two decimal places; dont use the % sign)