Question 2 0 l 1 point Asurplus unit is E\" A) income for the period exceeds expenditures. B} income and expenditures for the period are equal. C) spending is entirely financed by borrowing. 3' 3 Di expenditures for the period exceed receipts. Question 3 0 l 1 point Which of the following statements is CORRECT? A) In terms of an annuity, its present value is the reciprocal of its future value. 3' : B} If nominal interest rate, future value and time to maturity is held constant. an increase in the compounding frequency will increase the present value of a lump sum payment in the future. C) If nominal interest rate. mortgage principal and time to maturity is held constant, mortgagee will pay more interest if the payment is made monthly rather than quarterly. :9 Di The payment made each period under an amortized mortgage is constant. which consists of interest portion and principal portion. The later we are in the life of the mortgage. the smaller the interest portion (as a % of the payment). Question 1 0 I 1 point If you hold the annual nominal interest rate constant while increasing the number of compounding periods per year, then CD A) the effective interest rate will increase. B) the effective interest rate will be halved. C} the effective interest rate will not change. 3 1: D) the effective interest rate will decrease. Question 2 1 I 1 point During 2018, Jamie and Cersev Lannister expect total income of about $225,000 and are budgeting total expenditures of about $210,000. For this budget period, the Lannister family can be described as a A) Kingdom B) Deficit unit C} Company 'I i: D) Surplus unit Question 3 Which of the following CANNOT be calculated? O A) future value of a perpetuity O B) present value of an annuity O c) future value of an annuity O D) present value of a perpetuityQuestion 4 1 . Nationwide Bank offers a term deposit paying 4% interest (compound annually}. If you need $6.786 at the end of year 7, how much do you need to deposit now? Answer: 5,156.80 s/ Question 5 What is the effective annual rate of 6.? percent p.a. compounding quarterly? Hint: if your answer is 5.14%, please input as 5.14. rather than 0.0514. or 5.14%. or 5.14 per cent. Answer: 6.87 J Question 6 1 I 1 F You want to buy a new car in four years which will cost you $63,000. If you have $49,000 in your bank account now, how much is nominal interest rate (compounded annually) [3.3. to reach your goal? Hint: if your answer is 10.14%, please input as 10.14, rather than 0.1014, or 10.14%. or 10.14 per cent. Answer: 6.48 ~/ Question 7 0 I 1 point What is the present value of a 5year ordinary annuity with annual payments of $3,296? Assume interest rate is 6.1% p.a. compounded annually. Answer: 13.48626 at {13,846.26} Question 8 1 I 1 I Jack will receive $43378 at the end of each year until infinity. If the interest rate is 9% pa. how much is the present value of this income stream? Answer: 488,644.44 \\/ Question 9 1 I 1 point Suppose you deposit $4,000 at the beginning of each quarter and keep on doing this for 25 years. Assume that you can earn 7.2% p.a. on your saying. compounded quarterly. How much money will you accumulate at the end of year 25? Answer: l,120.608.65 ~/ Question 10 1 I 1 p Sylvia is going to buy her first house. She will borrow a $733000 27year 9.6% p.a. mortgage. How much is her monthly mortgage instalment, if she decides to pay off the mortgage in 27 years exactly and the payment is made at the end of each month? Answer: 6,343.89 ~/ Question 4 0 I 1 poi Steven has deposited $6.646 in 13.0% p.a. simple interest rate for 4 months. How much is his outstanding balance at the end of 4 months? Answer: 6,646 x (6,9 33.99} Question 5 0 I 1 no If you save $8.132 now and the account pays 11.9% per annum. compounding monthly, how much is the outstanding balance at the end of year 3? Answer: 11.011.57 x (11,600.50) Question 6 0 I 1 poi How much would you need to deposit today into an account earning 4.0% p.a. compounding quarterly, to have $5,947 at the end of year 6? Answer: 5,932.75 at (4,683.66) Question 7 0 l 1 po What is the present value of a 2year annuity due with annual payments of $1,817? Assume interest rate is 6.8% p.a. compounded annually. Answer: 3,557.54 at (3,518.31) Question 8 0 I 1 poi Jack will receive $34513 at the end of each year until infinity. If the interest rate is 13% pa. how much is the present value of this income stream? Answer: 261,851 x (265,484.62) Question 9 0 I 1 point William expects to live for another 25 years after retirement. During those 25 years, William plans to withdraw $4,000 living expense from his superannuation fund at the beginning of each month. How much is the minimum superannuation balance William needs when he retires? Assume his superannuation fund delivers 11.6% p.a. rate of return, compounded monthly. Answer: 2,000.000 x (394,482.38) Question 10 0 l 1 point You are planning your retirement and you come to the conclusion that you need to have saved $1.54 million in 29 years. You can invest into a superannuation that guarantees you a 5.3% p.a. return compounded monthly. To achieve your retirement saving goal, how much is the monthly contribution if it is made at the beginning of each month? Answer: 2,12 5.00 as (1,862.98)