Math test 2 practice problems

You invest $10,000 in Rapid Growth Funds, which appreciate by 6% per year, with yields reinvested quarterly. By how much (in dollars) will your investment have grown after 3 years? (Round your answer to the nearest cent.)

10000(1+0.06)^(4*3)= 11,956.18 11,956.18-10,0000= 1,956.18

You are offered three investments. The first promises to earn 13% compounded annually, the second will earn 12.5% compounded quarterly, and the third will earn 12% compounded monthly. Which is the best investment?

13% compounded annually 12.5% compounded quarterly 12% compounded monthly

Inflation has been running 3% per year. A car now costs $30,000. How much (in dollars) would it have cost 3 years ago? (Round your answer to the nearest cent.)

A=Ao(1+0.03)^3 solve for this first second 30,000=1.0927 A0=30,000/1.0927= 27,454.92

Inflation Housing prices have been rising by 6% per year. A house now costs $175,000. What would it have cost 10 years ago? (Round your answer to the nearest cent.)

A=Ao(1+0.06)^10 solve for this first =1.7908 175,000=1.7908 175,000/1.7908= 97,712.68

Determine the outstanding principal of the given mortgage. HINT [See Example 7.] (Assume monthly interest payments and compounding periods. Round your answer to the nearest cent.) a $100,000, 31-year, 4.9% mortgage after 10 years

NA

Find the amount accumulated FV in the given annuity account. HINT [See Quick Example 1 and Example 1.] (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest cent.) $130 deposited monthly for 20 years at 3% per year in an account containing $10,000 at the start

NA

OHaganBooks.com has just introduced a retirement package for its employees. Under the annuity plan operated by Sleepy Hollow, the monthly contribution by the company on behalf of each employee is $700. Each employee can then supplement that amount through payroll deductions. The current rate of return of Sleepy Hollow's retirement fund is 7.9%. Jane Callahan, the website developer at OHaganBooks.com, plans to retire in 10 years. She contributes $1,000 per month to the plan (in addition to the company contribution of $700). Currently, there is $80,000 in her retirement annuity. How much (to the nearest dollar) will it be worth when she retires? (Assume interest is compounded monthly.)

NA

OHaganBooks.com is seeking a $250,000 loan to finance its continuing losses. One of the best deals available is offered by Industrial Bank, which offers a 10-year 6.5% loan. OHaganBooks.com can afford to pay only $2,600 per month to service its debt. What, to the nearest dollar, is the largest amount the company can borrow from Industrial Bank? (Assume interest is compounded monthly.)

NA

Pensions Your pension plan is an annuity with a guaranteed return of 4% per year (compounded quarterly). You can afford to put $1,900 per quarter into the fund, and you will work for 40 years before retiring. After you retire, you will be paid a quarterly pension based on a 25-year payout. How much will you receive each quarter? (Round your answer to the nearest cent.)

NA

Savings You wish to accumulate $100,000 through monthly payments of $200. If you can earn interest at an annual rate of 4% compounded monthly, how long (to the nearest year) will it take to accomplish your goal?

NA

You currently owe $6000 on your credit card, which charges interest at the October 2015 rate. What is the least you need to pay per month to pay off the card in 9 years? (Round your answer to the nearest cent.)

NA

You were considering buying a home with a 30-year mortgage in November 2015 and could afford to make a down payment of $70,000 and up to $600 per month on mortgage payments. How much could you have afforded to pay for the home? (Round your answer to the nearest cent.)

NA

Find the amount accumulated FV in the given annuity account. (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest ten dollars.) $500 deposited monthly for 16 years at 3% per year. FIND FV

PV= 0 Pay= -500 FV= ? 123,021.33 Rate= 3 Period= 16(12)= 192 monthly

Find the periodic payments PMT necessary to accumulate the given amount in an annuity account. (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest cent.) $80,000 in a fund paying 5% per year, with quarterly payments for 20 years. FIND PMT

PV= 0 Pay= ? 587.72 FV= 80,000 Rate= 5 Period= 20(4)= 80 quarterly

Find the periodic withdrawals PMT for the given annuity account. (Assume end-of-period withdrawals and compounding at the same intervals as withdrawals. Round your answer to the nearest cent.) $400,000 at 2%, paid out monthly for 18 years, leaving $10,000 in the account after the 18 years. FIND PMT

PV= 400,000 Pay= ? 2,206.67 FV=0 Rate= 2 Period= 12(18)= 216 monthly

Determine the periodic payments PMT on the given loan or mortgage. (Round your answer to the nearest cent.) $500,000 borrowed at 5% for 7 years, with quarterly payments. FIND PMT

PV= 500,000 Pay= ? 21,274.32 FV=0 Rate= 5 Period= 7(4)= 28 quarterly

Find the periodic payments PMT necessary to accumulate the given amount in an annuity account. (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest cent.) $30,000 in a fund paying 5% per year, with monthly payments for 5 years, if the fund contains $10,000 at the start. FND PMT

PV=0 Pay=? 252.42 FV=30,000 Rate= 5 Period= 12(5)= 60 monthly

Find the amount accumulated FV in the given annuity account. (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest cent.) $2,300 is deposited quarterly for 20 years at 5% per year. FIND FV

PV=0 Pay=-2,300 FV=? 313,073.23 Rate= 5 Period= 20(4)= 80 quarterly

Find the present value PV of the annuity account necessary to fund the withdrawal given. (Assume end-of-period withdrawals and compounding at the same intervals as withdrawals. Round your answer to the nearest cent.) $300 per month for 15 years, if the account earns 7% per year. FIND PV

PV=? 33,376.79 Pay= -300 FV=0 Rate=7 Period= 15(12)= 180 monthly

I want to be earning an annual salary of $100,000 when I retire in 13 years. I have been offered a job that guarantees an annual salary increase of 4% per year, and the starting salary is negotiable. What is the lowest salary that I should request in order to meet my goal? (Round your answer to the nearest cent.)

PV=FV/(1+r/m)^mt PV=100000/(1+0.04)^13= 60,057.40

During 2008 the S&P 500 index depreciated by 37.6%.† Assuming that this trend had continued, how much would a $6,000 investment in an S&P index fund have been worth after 3 years? (Round your answer to the nearest cent.)

formula= FV=PV (1+r/m)^mt PV=6000, r=37.6%= -0.376, m=1, t= 3 years FV=6000(1+-0.376/1)^1*3= 1,457.8

Present Value Determine the amount of money, to the nearest dollar, you must invest at 5% per year, compounded annually, so that you will be a millionaire in 26 years.

formula= PV= FV/(1+r/m)^mt PV= 1,000,000/(1+0.05/1)^1*26= 281,246