Your grandparents put $$1,000$ into a savings account for you when you were born $20$ years ago.

This account has been earning interest at a compound rate of $7$ percent. What is its value today?

a$.$ $$3,870$

b$.$ $$3,026$

c$.$ $$1,967$

d$.$ $$3,583$

What would you be willing to pay today to receive $$5,000$ at the beginning of each year for the

next $10$ years if interest is earned at a rate of $8\%$ compounded annually?

a$.$ $$78,228$

b$.$ $$34,656$

c$.$ $$36,235$

d$.$ $$33,551$

When a loan is amortized over a five year term, the

a$.$ rate of interest is reduced each year

b$.$ amount of interest paid is reduced each year

c$.$ payment is reduced each year

d$.$ balance is paid as a balloon payment in the fifth year

You want to purchase a boat that costs $$40,000.$ You want to finance as much of the purchase as

possible with a $5-$year bank loan at $12\%$ compounded monthly, but can only afford loan

payments of $$750$ per month. How much will you need as a down payment to buy the boat?

$($Round to the nearest dollar$)$

a$.$ $$6,284$

b$.$ $$4,637$

c$.$ $$3,523$

d$.$ $$5,147$

You are considering buying a new car. The sticker price is $$15,000$ and you have $$2,000$ to put

toward a down payment. If you can negotiate a nominal annual interest rate of $10\%$ and you wish

to pay for the car over a $5-$year period, what are your monthly car payments?

a$.$ $$285\mathrm{.}78$

b$.$ $$216\mathrm{.}67$

c$.$ $$252\mathrm{.}34$

d$.$ $$318\mathrm{.}71$

e$.$ $$276\mathrm{.}21$

Which of the following cash flows has the highest present value $($PV$)$ at a $15$ percent discount

rate?

a$.$ $$1,150$ received one year from today

b$.$ $$2,000$ received $5$ years from today

c$.$ $$300$ received every year $($at the end of the year$)$ for $5$ years

d$.$ $$200$ received every year $($at the end of the year$)$ for $10$ years