MATH 106 Quiz 1 Answers
Question 1
If you paid $275 to a payday loan company for the use of $4000 for 90 days, what annual rate of interest is the company charging?
Question 2
What is the purchase price of a 39-week “T-bill” (US Treasury note) with a maturity value of $5000 that earns an annual interest rate of 4.29 % ?
Question 3
Using the commission schedule provided at the beginning of this quiz, find the annual rate of interest earned by an investment of 400 shares purchased at $21.40 a share, held for 26 weeks, and then sold at $27.60 a share.
Question 4
How long (in years) will it take money to triple if it is invested at 7.0% compounded continuously? Round answer to nearest tenth of a year
Question 6
What is the annual percentage yield (APY) for money invested at an annual rate of 4.45% compounded daily?
Question 7
Tralfaz Life Insurance Company offers a “child’s college education” annuity that pays 7.2% compounded quarterly. What equal quarterly deposit should be made into this annuity in order to have $200,000 for college expenses in 18 years?
Question 8
Ivan makes his first deposit of $1500 into a Roth IRA earning 6.5% interest compounded annually at age 36. He continues to make an annual deposit of $1500 until he is 60 (25 deposits in all). With no additional deposits after age 60, the money in Ivan’s Roth IRA continues to earn 6.5% interest compounded annually until he retires at age 66. How much money is in Ivan’s Roth IRA when he retires?
Question 9
RipUOff.com, an online lending service, offers a 48-month auto loan at 13.5% compounded monthly to applicants with “poor” credit ratings.
a. If an applicant has a “poor” credit rating but can afford to make monthly payments of $400, how much can he or she borrow from RipUOff.com?
b. What is the total interest the applicant will pay for this loan?
Question 10
A family takes out a 30-year, $176,000 mortgage at 4.25% compounded monthly after putting $44,000 down to buy a home valued at $220,000 ($44,000 is 20% of $220,000). Find:
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