Insurance companies do not use annuities.

True

False

An annuity due can use the ordinary annuity table if one extra period is added and:

Add one payment to total value

Subtract one payment from total value

Add two payments to total value

Subtract three payments from total value

None of these

Abby Mia wants to know how much must be deposited in her local bank today so that she will receive yearly payments of $18,000 for 20 years at a current rate of 9% compounded annually. (Use the tables in the handbook.)

$1,085.82

$1,463.13

$164,313

$163,313

None of these

Lee Associates borrowed $60,000. The company plans to set up a sinking fund that will pay back the loan at the end of 12 years. Assuming a rate of 8% compounded semiannually, the amount to be paid into the fund each period is (use the tables in the handbook):

$1,350

$1,536

$1,653

$5,163

None of these

How much would Howard Steele need to invest today so that he may withdraw $12,000 each year for the next 20 years, assuming a rate of 8% compounded annually? (Use the tables in the handbook.)

$117,817.20

$454,144.00

$112,817.20

$549,144

None of these

Which one of the following statements is incorrect?

APR is the true effective annual interest charged by sellers

The Truth in Lending Act regulates interest charges

APR represents the true effective annual rate of interest

None of these

Ed Sloan bought a new Explorer for $22,000. He put down $7,000 and paid $290 for 60 months. The total finance charge to Ed is:

$15,000

$17,400

$2,400

$4,200

None of these

Jen purchased a condo in Naples, Florida, for $699,000. She put 20% down and financed the rest at 5% for 35 years. What are Jen's total finance charges?

$457,425.60

$606,823.20

$626,863.20

$600,000.00

None of these

Points represent:

2% of the amount of the loan

Monthly payments

An additional cost of receiving the mortgage

3% up-front payment

None of these

Ben Brown bought a home for $225,000. He put down 20%. The mortgage is at 6 % for 30 years. Using the table in the handbook, his monthly payment is:

$1,319.04

$1,319.40

$1,216.80

$1,139.40

None of these

The difference between the monthly payments on a $120,000 home at 6 % and at 8% for 25 years is (use the table in the handbook):

$81.12

$151.02

$115.20

$91.12

None of these

Craig Hammer purchased a new condominium for $225,000. The bank required a $30,000 down payment. Assuming a rate of 8% on a 25-year mortgage, Craig's monthly payment is (use the table in the handbook):

$1,431.30

$1,413.30

$1,505.40

$1,505.04

None of these

Bill Moore took out an $80,000 mortgage on a ski chalet. The bank charged 4 points at closing. The points in dollars cost Bill:

$800

$3,200

$2,400

$1,600

None of these

Darlene Ramirez bought a home for $140,000. She put 20% down with a mortgage rate at 7.5% for 25 years. Her yearly payments are:

$1,776

$9,932.16

$12,415.20

$9,329.61

None of these

Selecting a base year and expressing each amount as a percent of the base year amount is called:

Trend analysis

Horizontal analysis

Vertical analysis

Ratio analysis

None of these