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Math 1090
Name _________________________________________
Exam 3 (Take Home Test)
PART I - MULTIPLE CHOICE (no partial credit)
Use I = Prt for simple interest to find the indicated quantity.
1) P = $3000; t = 90 days; I = $105. Find r. (Use 360 days in a year.)
A) 14.0%
B) 14.2%
C) 9.7%
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D) 3.5%
Use the formula A = P(1 + rt) to find the indicated quantity.
2) A = $16,400; r = 10%; 90 days. Find P.
A) $16,000
2)
B) $16,810
C) $16,400
D) $400.00
Find the amount that will be accumulated in the account under the given conditions.
3) The principal $15,400 is accumulated with simple interest of 16% for 5 years.
A) $20,212.50
B) $27,720
C) $12,320
3)
D) $15,892.80
Find the compound interest earned. Round to the nearest cent.
4) $700 at 8% compounded semiannually for 4 years
A) $118.90
4)
B) $252.34
C) $258.00
D) $595.65
Solve the problem. Round to the nearest cent as needed.
5) Samanthaʹs savings account has a balance of $4643. After 25 years, what will the amount of
interest be at 6% compounded annually?
A) $2785.80
B) $15,289.16
C) $15,284.16
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D) $15,275.16
Find the periodic payment that will render the sum.
6) FV = $29,000, interest is 8% compounded monthly, payments made at the end of each month for 3
years
A) $1528.16
B) $2329.33
C) $715.42
6)
D) $8585.06
Solve the problem. Round to the nearest cent.
7) Larry wants to start an IRA that will have $730,000 in it when he retires in 30 years. How much
should he invest semiannually in his IRA to do this if the interest is 9% compounded
semiannually?
A) $3512.31
B) $2521.61
C) $2508.61
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D) $11,965.83
7)
Solve the problem.
8) Sammy borrowed $10,000 to purchase a new car at an annual interest rate of 11%. She is to pay it
back in equal monthly payments over a 5-year period. How much total interest will be paid over
the period of the loan? Round to the nearest dollar.
A) $92
B) $3630
C) $3045
8)
D) $1435
Solve the problem. Round dollar amounts to the nearest cent. Use 360 days.
9) Polson Associates bought a new computer system. To pay for the system, they borrowed $41,950
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from the bank at 8 % interest for 130 days. Find the simple interest.
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A) $1325.50
B) $1315.31
C) $1307.35
D) $3670.63
PART II - SHOW YOUR WORK (partial credit awarded)
Provide an appropriate response.
10) If you pay $5,500 for a simple interest note that will be worth $6,000 in 21 months, what
annual simple interest rate will you earn? (Compute the answer to one decimal place.)
10)
Solve the problem. Round to the nearest cent as needed.
11) A bank has $750,000 to lend for 7 months. It can lend it to a local contractor at a simple
interest rate of 12%, or it can lend it to a small business that will pay 12% compounded
monthly. If the bank wants to maximize its interest earned, who should receive the loan
(contractor or business) and what is the additional interest earned?
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9)
Solve the problem.
12) At the end of every 3 months, Judy deposits $100 into an account that pays 6%
compounded quarterly. After 4 years, she puts the accumulated amount into a certificate
of deposit paying 7.5% compounded semiannually for 1 year. When this certificate
matures, how much will Judy have accumulated?
12)
Find the monthly house payment necessary to amortize the following loan.
13) In order to purchase a home, a family borrows $267,000 at 10.8% for 15 yr. What is their
monthly payment? Round the answer to the nearest cent.
13)
Use an amortization table to solve the problem. Round to the nearest cent.
14) A home was purchased 14 years ago for $70,000. The home was financed by paying a 20%
down payment and signing a 25 year mortgage at 8.5% compounded monthly on the
unpaid balance. The market value is now $100,000. The owner wishes to sell the house.
How much equity (to the nearest dollar) does the owner have in the house after making
168 monthly payments?
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