1. The actual interest rate you pay to a lender, as opposed to what the lender is required to quote to you, is referred to as which one of the following?

A. Compound rate

B. Annual percentage rate

C. Effective annual rate

D. Simple rate

E. Common rate

2. Your employer contributes $100 a week to your retirement plan. Assume you work for your employer for 40 years and the applicable interest rate is 9 percent. Given these assumptions, what will this employee benefit amount to on the day you leave the company?

A. $2,231,928

B. $960,299

C. $2,050,217

D. $1,828,925

3. Sandra is going to contribute $420 on the first of each month, starting one month from today, to her retirement account. Her employer will provide a 50 percent match. In other words, her employer will add $210 to the amount Sandra saves. If both Sandra and her employer continue to do this and she can earn a rate of 8.4 percent, how much will she have in her retirement account 40 years from today?

A. $1,815,382

B. $961,172

C. $4,888,222

D. $3,561,737

E. $2,470,875

4. You are buying your first home using a 30-year mortgage. The mortgage rate is 4.625 percent and the purchase price of the home is $146,000. Your down-payment is 10 percent of the purchase price. Calculate your monthly mortgage payment (of principal and interest).

A. $675.58

B. $751.46

C. $655.08

D. $702.87

5. You just received $155,000 from an insurance settlement. You have decided to set this money aside and invest it for your retirement. Currently, your goal is to retire 35 years from today. How much more will you have in your account on the day you retire if you can earn an annual return of 8.5 percent rather than just 7.0 percent?

A. $989,576

B. $708,756

C. $1,532,971

D. $2,254,630

E. $1,038,974

6. You borrow $210,000 to purchase a home. The terms of the loan call for monthly payments over 30 years at a mortgage rate of 4.50 percent. How much total interest will you pay in the 30-year period if you make all your payments on time?

A. $383,054

B. $211,540

C. $113,959

D. $173,054

7. You want to buy a new sports car from Muscle Motors for $47,000. The contract is in the form of a 60-month ordinary annuity at an APR of 6.0 percent. What will your monthly payments be?

A. $878

B. $767

C. $1,005

D. $909

E. $692

8. You just received an offer in the mail to transfer your $20,000 balance from your current credit card, which charges an annual rate of 18.6 percent, to a new credit card charging a rate of 4.8 percent. You plan to make payments of $400 a month on this debt. How many fewer payments will you have to make to pay off this debt if you transfer the balance to the new card?

A. 4.34 years

B. 3.05 years

C. 5.70years

D. 4.76 years

E. 3.42 years

9. You are scheduled to receive $30,000 two years from today. When you receive it, you will invest it for 5 more years, at 6 percent per year. How much money will you have 7 years from now?

A. $47,209.19

B. $39,381.16

C. $40,146.77

D. $51,414.73

E. $38,909.19

10. You are given that the present value of the cash flows shown in the table below is $45,000. What is the amount of the missing cash flow? Assume an interest rate of 11 percent. End of Year Cash Flow 1 $20,000 2 $20,000 3 ????? 4 $10,000

A. $5,692

B. $6,343

C. $7,704

D. $11,923

E. -$5,000

Answer rating: 100% (QA)

1 C Effective annual rate ... View the full answer