1. What is the future value of $1,000 in 20 years assuming an interest rate of 6 percent compounded semiannually?

Multiple Choice

• $1,117.85

• $3,262.04

• $1,200.42

• $3,098.94

• $3,207.14

2. Barcain Credit Corp. wants to earn an effective annual return on its consumer loans of 12 percent per year. The bank uses daily compounding on its loans.

Required:

What interest rate is the bank required by law to report to potential borrowers?

Multiple Choice

• 12.75%

• 12.47%

• 10.20%

• 12.00%

• 11.33%

3.) You are borrowing $5,420 to buy a car. The terms of the loan call for monthly payments for 3 years at a 5.00 percent interest. What is the amount of each payment?

Multiple Choice

• $139.86

• $139.31

• $162.44

• $179.57

• $176.22

7. You are planning to make monthly deposits of $140 into a retirement account that pays 12 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 21 years?

Multiple Choice

• $137,253.88

• $157,836.03

• $149,944.23

• $165,727.83

• $1,894,032.35

8. You want to buy a new sports car from Muscle Motors for $54,000. The contract is in the form of a 60-month annuity due at a 7.20 percent APR.

Required:

What will your monthly payment be?

Multiple Choice

• $1,046.60

• $1,014.56

• $1,067.96

• $1,074.37

• $1,089.32

17. A 19-year annuity pays $1,300 per month, and payments are made at the end of each month. The interest rate is 7 percent compounded monthly for the first Six years and 5 percent compounded monthly thereafter.

Required:

What is the present value of the annuity?

Multiple Choice

• $177,689.68

• $225,152.39

• $170,721.46

• $2,090,466.81

• $174,205.57

18. Your job pays you only once a year for all the work you did over the previous 12 months. Today, December 31, you just received your salary of $45,000 and you plan to spend all of it. However, you want to start saving for retirement beginning next year. You have decided that one year from today you will begin depositing 2 percent of your annual salary in an account that will earn 12 percent per year. Your salary will increase at 6 percent per year throughout your career.

How much money will you have on the date of your retirement 41 years from today?

Multiple Choice

• $1,483,696.00

• $1,454,022.00

• $1,399,713.00

• $14,237.00

• $4,689,769.00

24. You are considering an annuity which costs $91,563 today. The annuity pays $6,300 a year at an annual interest rate of 5.5 percent. What is the length of the annuity time period?

Multiple Choice

• 31.00 years

• 20.06 years

• 39.84 years

• 28.90 years

• 30.00 years

25. You are scheduled to receive annual payments of $9,900 for each of the next 28 years. The discount rate is 7.0 percent. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each year?

Multiple Choice

• 9,900.00

• 9,480.74

• 8,833.75

• 8,411.02

• 10,593.00

26. What is the present value of $1,200 per year, at a discount rate of 7 percent, if the first payment is received 7 years from now and the last payment is received 27 years from now?

Multiple Choice

• $8,490.92

• $8,664.20

• $3,329.00

• $8,471.09

• $13,002.63