Finite Mathematics and Applied Calculus 7th Edition Stefan Waner Steven Costenoble-Test Bank
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Sample Test
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3_1_Simple_Interest 1. A 6-year bond costs $9,000 and will pay a total of
$2,700 interest over its lifetime. What is its annual interest rate?
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2. A $8,200 loan, taken now, with
a simple interest rate of 5% per year, will require a total payment of
$10,660. When will the loan mature?
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3. The simple interest on a $7,600
loan at 7% per year amounted to $4,788. When did the loan mature?
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4. Find the simple interest on a
$2,000 investment made for 5 years at an interest rate of 5% per year. What
is the future value?
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5. Find the simple interest on a
$3,000 investment made for 10 years at an interest rate of 5% per year. What
is the future value?
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6. Find the simple interest on a
$20,600 investment made for 6 months at an interest rate of 8% per year. What
is the future value? Round your answer to the nearest ten.
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7. Find the simple interest on a
$18,800 investment made for 9 months at an interest rate of 10% per year.
What is the future value? Round to the nearest ten.
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8. Your total payment on a 8-year
loan, which charged 7.5% simple interest, amounted to $33,000. How much did
you originally borrow? Round your answer to the nearest cent.
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9. At auction on January 11, 1999,
1 year US Treasury Bills were sold at a discount of 5.356%. What was the
annual yield rounded to the nearest 0.001%?
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10. Given that , for what interest
rate is this the equation of future value (in dollars) as a function of
time t (in
years)? (Round your answer to the nearest 0.1%.)
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11. You hear on the evening
news:”The economy last year grew by 5% from the previous year, and this was
the second year in a row in which the economy showed a 5% growth.” This means
that, in dollar terms, the economy grew more last year
than the year before. State whether this statement is
right or wrong.
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12. Find the present value of an
investment at 7% annual simple interest which is worth $30,000 after 30
months. Round your answer to the nearest cent.
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13. Find the present value of an
investment at 5.25% annual simple interest which is worth $6,700 after 5
years. Round your answer to the nearest dollar.
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14. A 8-year bond costs $10,000
and will pay a total of $2,400 in interest over its lifetime. What is its
annual interest rate?
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15. At auction on August 18, 2005,
3-month T-bills were sold at a discount of 3.670%. What was the simple annual
yield? Round answer to the nearest 0.001%.
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16. You take out a 2-year, $5,000
loan at 7% simple annual interest. The lender charges you a $300 fee.
Thinking of the fee as additional interest, what is the actual annual
interest rate you will pay? Round answer to the nearest 0.001% .
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17. Calculate to the nearest
0.01% your annual loss (on a simple interest basis) if you had bought
Apple stock in March, 2000, and sold in January, 2002.
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18. Did Apple’s stock undergo
simple interest increase in the period December, 1997, through March, 2000?
,
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19. If Apple’s stock underwent
simple interest increase from February, 2005, through August, 2005 and
into 2006, what would the price be in December, 2006? Round your answer to
the nearest cent.
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20. At what annual (simple
interest) rate did the population of some county increase from 1970 to
2000? Round your answer to one decimal place.
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21. A two-year bond has a maturity
value of $5,000 and will pay a total of $1,750 interest over its lifetime.
What is the annual interest rate rounded to the nearest 0.1%? r = __________ %
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22. A $6,000 loan, taken now, with
a simple interest rate of 9% per year, will cost a total of $9,240. How many
years until the loan matures? (Round your answer to the nearest whole year.) t = __________ years
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23. The simple interest on a
$19,000 loan, at 11% per year, amounted to $8,930. When did the loan mature?
(Round your answer to the nearest whole month.) t = __________ months
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24. At auction on January 11,
1999, 1 year US Treasury Bills were sold at a discount of 5.348%. What was
the annual yield rounded to the nearest 0.001%? r = __________ %
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25. Given that , for what interest
rate is this the equation of future value (in dollars) as a function of
time t (in
years)? (Round your answer to the nearest 0.1%.) __________%
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26. A 6-year bond costs $15,000
and will pay a total of $2,700 in interest over its lifetime. What is its
annual interest rate? Round answer to the nearest whole number. __________%
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27. At auction on August 18, 2005,
3-month T-bills were sold at a discount of 3.585%. What was the simple annual
yield? Round answer to the nearest 0.001%. __________%
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28. You take out a 2-year, $5,000
loan at 9% simple annual interest. The lender charges you a $200 fee.
Thinking of the fee as additional interest, what is the actual annual
interest rate you will pay? Round answer to the nearest whole number. __________%
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29. Calculate to the nearest
0.01% your annual percentage loss (on a simple interest basis) if
you had bought Apple stock in March, 2000, and sold in January, 2002.
__________%
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30. If Apple’s stock underwent
simple interest increase from February, 2005, through August, 2005 and
into 2006, what would the price be in December, 2006? Round your answer to
the nearest cent.
$ __________
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31. At what annual (simple
interest) rate did the population of some county increase from 1950 to
2000? Round your answer to one decimal place. __________%
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32. Find the simple interest on a
$3,000 investment made for 5 years at an interest rate of 4% per year. What
is the future value? INT = $ __________ FV = $ __________
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33. Find the simple interest on a
$5,000 investment made for 1 year at an interest rate of 8% per year. What is
the future value? INT = $ __________ FV = $ __________
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34. Find the simple interest on a
$3,000 investment made for 6 months at an interest rate of 8% per year. What
is the future value? INT = $ __________ FV = $ __________
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35. Find the simple interest on a
$1,700 investment made for 3 months at an interest rate of 17% per year. What
is the future value? INT = $ __________ FV = $ __________
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36. Your total payment on a 8-year
loan, which charged 7.5% simple interest, amounted to $36,000. How much did
you originally borrow? Round your answer to the nearest cent. $__________
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37. Find the present value of an
investment at 3.25% annual simple interest which is worth $6,400 after 5
years. Round your answer to the nearest dollar. $ __________
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38. Find the present value of an
investment at 5% annual simple interest which is worth $50,000 after 30
months. Round your answer to the nearest cent. $__________
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39. You hear on the evening
news:”The economy last year grew by 6% from the previous year, and this was
the second year in a row in which the economy showed a 6% growth.” This means that, in dollar terms,
the economy grew more last year than the year before. Why?
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40. Did Apple’s stock undergo
simple interest increase in the period December, 1997, through March, 2000?
(Give a reason for your answer.)
,
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3_2_Compound_Interest 1. Doubling the frequency of compounding in a compound
interest investment will not double the amount of the interest.
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2. The effective rate exceeds the
nominal rate when the interest is compounded more than once a year
resulting in a larger effective rate.
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3. Calculate the future value of
an investment of $3,500, after one year, if it is deposited in a savings
account that is compounded quarterly at an annual rate of 11%. Round
your answer to the nearest cent.
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4. $10,000 is deposited in a money
market account when interest is compounded every month at an annual rate of
6%. Find the total amount accumulated at the end of 5 years. Round your
answer to the nearest cent.
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5. You invest $13,000 in Rapid
Growth Funds, which appreciate by 2% per year, with yields reinvested
quarterly. By how much will your investment have grown after 7 years? Round
your answer to the nearest cent.
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6. How much would you have to invest
when you are 20 years old at 9% compounded monthly to end up with a million
dollars by age 48? Round your answer to the nearest thousand.
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7. Calculate, to the nearest 0.1%,
what annual interest rate would be required if you invested $6,000 in Apple
stock and ended up with $15,622 when you sold the stock after 5 years? Assume
that interest was compounded quarterly.
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8. Inflation has been running 6%
per year. A car now costs $32,000. How much would it have cost 9 years ago?
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9. Find the effective annual
interest rate of 4% compounded quarterly.
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10. You are offered three
investments. What is the best investment?
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11. Calculate the future value of
an investment of $14,000 at 5.5% per year, compounded weekly, after 6 years.
Assume 52 weeks per year.
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12. Calculate the future value of
an investment of $5,000 at 0.8% per year, compounded monthly, after 8
years. Round your answer to the nearest cent.
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13. Calculate the present value of
an investment that will be worth $2,000 after 3 years at 8% per year
compounded annually. Round your answer to the nearest cent.
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14. Find the effective annual
interest rate of 17% compounded monthly.
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15. Determine the amount of money,
to the nearest dollar, you must invest now at 5% per year compounded
annually, so that you will be a millionaire in 50 years.
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16. Calculate, to the nearest
cent, the future value of an investment of $14,000 at 4.25% per year,
compounded quarterly (4 times per year), after 7 years.
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17. Calculate, to the nearest
cent, the future value of an investment of $28,000 at 10.45% per year,
compounded monthly, after 14 years.
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18. Calculate, to the nearest
cent, the present value of an investment that will be worth $4,000 after 9
years, at 10% per year, compounded annually.
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19. Calculate, to the nearest
cent, the present value of an investment that will be worth $16,000 after 7
years, at 7.4% compounded quarterly.
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20. Find the effective annual
interest rate of 11% compounded monthly. Round your answer to the nearest
0.01%.
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21. Find the effective annual
interest rate of 7% compounded daily. Assume 365 days per year. Round your
answer to the nearest 0.01%.
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22. You deposit $1,500 in an
account at the Lifelong Trust Savings and Loan that pays 6% per year
compounded quarterly. By how much will your deposit have grown after 8 years?
Round the answer to the nearest cent.
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23. When I was considering what to
do with my $8,000 Lottery winnings, my broker suggested I invest half of it
in gold, whose value was growing by 12% per year, and the other half in
certificates of deposit (CDs), which were yielding 9% per year compounded
every 6 months. Assuming that these rates are sustained, how much will my
investment be worth in 7 years? Round your answer to the nearest cent.
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24. When I was considering what to
do with the $6,000 proceeds from my sale of technology stock, my broker
suggested I invest half of it in municipal bonds, whose value was growing by
15% per year, and the other half in certificates of deposit (CDs), which were
yielding 7% per year compounded every 2 months. Assuming that these rates are
sustained, how much will my investment be worth in 8 years? Round your answer
to the nearest cent.
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25. During a prolonged recession,
property values on Long Island depreciated by 8% every six months. If my
house cost $200,000 originally, how much was it worth 5 years later? Round
your answer to the nearest cent.
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26. My recent marketing idea,
the Miracle Algae
Growing Kit, has been remarkably successful, with monthly sales
growing by 5% every 6 months over the past 3 years. Assuming that I sold 450
kits the first month, what is the present rate of sales? Round your answer to
the nearest whole number.
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27. Inflation is running at 2.4%
per year when you deposit $11,000 in an account earning 6.5% per year
compounded quarterly. In constant dollars, how much money will
you have 4 years from now? Round your answer to the nearest cent. [Hint:
First calculate the value of your account in 4 year’s time, and then find its
present value based on the inflation rate.]
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28. If Brazil has an annual
inflation rate of 11% and an item will cost 125,000 reals in 3 years,
what does the same item cost now? Round to the nearest real.
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29. The nominal rate exceeds
the effective rate when the interest is compounded _________ once a year
resulting in a larger effective rate.
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30. Doubling the frequency of compounding
in a compound interest investment ________ double the amount of the interest.
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31. Find the effective annual
interest rate of 4% compounded monthly. Round your answer to the nearest
0.01%. reff = __________ %
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32. Calculate, to the nearest
cent, the future value of an investment of $12,000 at 7% per year, compounded
annually, after 11 years. FV = $__________
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33. Calculate, to the nearest
cent, the future value of an investment of $12,000 at 4.5% per year,
compounded quarterly, after 5 years. FV = $__________
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34. Calculate, to the nearest
cent, the future value of an investment of $22,000 at 6% per year, compounded
monthly, after 12 years. FV = $__________
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35. Calculate, to the nearest
cent, the present value of an investment that will be worth $2,000 after 17
years, at 4% per year, compounded annually. PV = $__________
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36. Calculate, to the nearest
cent, the present value of an investment that will be worth $14,000 after 5
years, at 7% compounded monthly. PV = $__________
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37. Find the effective annual
interest rate of 13% compounded monthly. Round your answer to the nearest
0.01%. __________ %
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38. Find the effective annual
interest rate of 10% compounded daily. Assume 365 days per year. Round your
answer to the nearest 0.01%. __________ %
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39. When I was considering what to
do with my $7,500 Lottery winnings, my broker suggested I invest half of it
in gold, whose value was growing by 11% per year, and the other half in
certificates of deposit (CDs), which were yielding 9% per year compounded
every 6 months. Assuming that these rates are sustained, how much will my
investment be worth in 7 years? Round your answer to the nearest cent. $ __________
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40. When I was considering what to
do with the $9,000 proceeds from my sale of technology stock, my broker
suggested I invest half of it in municipal bonds, whose value was growing by
12% per year, and the other half in certificates of deposit (CDs), which were
yielding 3% per year compounded every 2 months. Assuming that these rates are
sustained, how much will my investment be worth in 12 years? Round your
answer to the nearest cent. $ __________
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41. You invest $11,000 in Rapid
Growth Funds, which appreciate by 2% per year, with yields reinvested
quarterly. By how much will your investment have grown after 7 years? Round
your answer to the nearest cent. $ __________
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42. During a prolonged recession,
property values on Long Island depreciated by 4% every six months. If my
house cost $210,000 originally, how much was it worth 6 years later? Round
your answer to the nearest cent. $ __________
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43. Determine the amount of money,
to the nearest dollar, you must invest at 5.8% per year, compounded
semiannually, so that you will be a millionaire in 23 years time. Round your
answer to the nearest dollar. $ __________
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44. My recent marketing idea,
the Miracle Algae
Growing Kit, has been remarkably successful, with monthly sales
growing by 4% every 6 months over the past 8 years. Assuming that I sold 250
kits the first month, what is the present rate of sales? Round your answer to
the nearest whole number. __________ kits per month
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45. Inflation is running at 2.1%
per year when you deposit $11,000 in an account earning 6.1% per year
compounded quarterly. In constant dollars, how much money will
you have 4 years from now? Round your answer to the nearest cent. [Hint:
First calculate the value of your account in 4 year’s time, and then find its
present value based on the inflation rate.] $ __________
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46. If Brazil has an annual
inflation rate of 11% and an item will cost 130,000 reals in 5 years,
what does that same item cost now? Round to the nearest real. __________ reals
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47. Calculate, to the nearest
cent, the future value of an investment of $7,000 at 1.5% per year,
compounded quarterly, after 7 years. $ __________
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48. Calculate, to the nearest
cent, the future value of an investment of $12,000 at 4.5% per year,
compounded weekly, after 4 years. Assume 52 weeks per year. $ __________
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49. Calculate, to the nearest
cent, the future value of an investment of $12,000 at 0.3% per year,
compounded monthly, after 8 years. $ __________
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50. Calculate the present value of
an investment that will be worth $1,000 after 6 years at 4% per year
compounded annually. Round your answer to the nearest cent. P = __________
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51. You deposit $4,000 in an
account at the Lifelong Trust Savings and Loan that pays 7% per year
compounded quarterly. By how much will your deposit have grown after 5 years?
Round the answer to the nearest cent. $__________
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52. Determine the amount of money,
to the nearest dollar, you must invest now at 5% per year compounded
annually, so that you will be a millionaire in 35 years. Round your answer to
the nearest cent. $__________
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53. Calculate, to the nearest
cent, the future value of an investment of $12,000 at 0.4% per month,
compounded monthly, after 8 years. FV = $ __________
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54. Inflation has been running 3%
per year. A car now costs $29,000. How much would it have cost 9 years ago?
Round your answer to the nearest cent. The car will have cost __________ 9 years ago.
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55. Calculate, to the nearest
0.1%, what annual interest rate would be required if you invested $6,000 in
Apple stock and ended up with $11,264 when you sold the stock after 9 years?
Assume that interest was compounded quarterly. The required annual interest rate is __________%.
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56. Find the effective annual
interest rate of 10% per year compounded annually, semiannually, quarterly,
and monthly. Round the answers to 0.01%.
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57. You are offered three investments.
The first promises to earn 19% compounded annually, the second will earn
18.5% compounded quarterly, and the third will earn 18% compounded weekly.
What is the best investment? The best investment is the __________ investment.
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3_3_Annuities__Loans__and_Bonds 1. Find the amount accumulated in the increasing annuity
of $200 deposited monthly for 5 years at 3% per year. (Assume end-of-period
deposits and compounding at the same intervals as deposits.) Round your
answer to the nearest cent.
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2. Find the amount accumulated in
the increasing annuity of $150 deposited monthly for 15 years at 5% per year.
(Assume end-of-period deposits and compounding at the same intervals as
deposits.) Round your answer to the nearest cent.
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3. Find the amount accumulated in
the increasing annuity of $2,500 deposited quarterly for 25 years at 4% per
year. (Assume end-of-period deposits and compounding at the same intervals as
deposits.) Round answer to the nearest cent.
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4. Find the amount accumulated in
the increasing annuity of $2,500 deposited quarterly for 10 years at 5% per
year. (Assume end-of-period deposits and compounding at the same intervals as
deposits.) Round your answer to the nearest cent.
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5. Determine the monthly payment
necessary to accumulate $30,000 in a fund paying 6% per year, compounded
monthly, for 8 years. (Assume end-of-period deposits and compounding at the
same intervals as deposits.) Round your answer to the nearest cent.
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6. Determine the monthly payment
necessary to accumulate $30,000 in a fund paying 6% per year, compounded
monthly, for 8 years. Assume end-of-period deposits and compounding at the
same intervals as deposits. Round the answer to the nearest cent.
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7. Determine the quarterly payment
necessary to accumulate $65,000 in a fund paying 8% per year, compounded
quarterly, for 10 years. Assume end-of-period deposits and compounding at the
same intervals as deposits. Round the answer to the nearest cent.
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8. Find the present value of the
decreasing annuity necessary to fund a withdrawal of $100 per month for
20 years, if the annuity earns 3% per year. (Assume end-of-period deposits
and compounding at the same intervals as deposits.) Round your answer to the
nearest cent.
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9. Find the present value of the
decreasing annuity necessary to fund a withdrawal of $1,500 per quarter
for 20 years, if the annuity earns 3% per year. (Assume end-of-period
deposits and compounding at the same intervals as deposits.) Round your
answer to the nearest cent.
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10. Determine the periodic payment
for a loan of $25,000 borrowed at 6% for 7 years, with monthly payments.
Round your answer to the nearest cent.
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11. Determine the periodic payment
for a loan of $200,000 borrowed at 3% for 15 years, with monthly
payments. Round your answer to the nearest cent.
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12. Find the amount accumulated in
an increasing annuity in which $100 is deposited monthly for 20 years at 5%
per year in an account containing $10,000 at the start. (Assume end-of-period
deposits and compounding at the same intervals as deposits.) Round your
answer to the nearest cent.
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13. Find the present value of a
decreasing annuity necessary to fund withdrawals of $1,100 per month for 10
years, if the annuity earns 6% per year. (Assume end-of-period deposits and
compounding at the same intervals as deposits.) Round your answer to the
nearest cent.
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14. Find the present value of a
decreasing annuity necessary to fund withdrawals of $2,500 per quarter for 20
years, if the annuity earns 4% per year. (Assume end-of-period deposits and
compounding at the same intervals as deposits). Round your answer to the
nearest cent.
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15. Find the periodic withdrawal
for an annuity containing $275,000 at 6%, paid out monthly for 30 years.
(Assume end-of-period deposits and compounding at the same intervals as
deposits). Round your answer to the nearest cent.
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16. Find the periodic withdrawal
for an annuity of $140,000 at 5%, paid out monthly for 17 years.
(Assume end-of-period deposits and compounding at the same intervals as
deposits.) Round your answer to the nearest cent.
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17. Find the periodic withdrawal
for an annuity of $75,000 at 4%, paid out quarterly for 25 years. (Assume
end-of-period deposits and compounding at the same intervals as deposits.)
Round your answer to the nearest cent.
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18. Find the periodic withdrawal
for an annuity of $240,000 at 6%, paid out quarterly for 25 years. (Assume
end-of-period deposits and compounding at the same intervals as deposits.)
Round your answer to the nearest cent.
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19. Determine the selling price,
per $1,000 maturity value, of a 10-year, 4.885% bond, with a yield of 4.890%.
(Assume twice-yearly interest payments.) Round your answer to the nearest
cent.
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20. While shopping for a car loan,
you get the following offers: Solid Savings & Loan is willing to loan you
$25,000 at 13% interest for 5 years. Fifth Federal Bank & Trust will loan
you the $25,000 at 7% for 6 years. Both require monthly payments. You can
afford $500 per month. Which loan, if either, can you take?
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21. Find the amount accumulated in
the increasing annuity of $100 deposited monthly for 10 years at 8% per year.
(Assume end-of-period deposits and compounding at the same intervals as
deposits.) Round your answer to the nearest cent. $__________
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22. Find the amount accumulated in
the increasing annuity in which $150 is deposited monthly for 20 years at 4%
per year. (Assume end-of-period deposits and compounding at the same
intervals as deposits.) Round your answer to the nearest cent. $__________
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23. Find the amount accumulated in
the increasing annuity of $1,600 deposited quarterly for 10 years at 6% per
year. (Assume end-of-period deposits and compounding at the same intervals as
deposits.) Round your answer to the nearest cent. $__________
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24. Find the amount accumulated in
the increasing annuity in which $2,000 is deposited quarterly for 10 years at
7% per year. (Assume end-of-period deposits and compounding at the same
intervals as deposits.) Round your answer to the nearest cent. $__________
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25. Determine the monthly payment
necessary to accumulate $40,000 in a fund paying 8% per year, compounded
monthly, for 6 years. (Assume end-of-period deposits and compounding at the
same intervals as deposits.) Round your answer to the nearest cent. $__________ per month
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26. Find the monthly payment
necessary to accumulate $10,000 in an increasing annuity paying 2% per year,
with monthly payments for 7 years. (Assume end-of-period deposits and compounding
at the same intervals as deposits.) Round your answer to the nearest cent. $__________ per month
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27. Determine the quarterly
payment necessary to accumulate $100,000 in a fund paying 7% per year,
compounded quarterly, for 19 years. Assume end-of-period deposits and
compounding at the same intervals as deposits. (Round your answer to the
nearest cent.) $__________ per quarter
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28. Find the present value of a
decreasing annuity necessary to fund withdrawals of $800 per month for 10
years, if the annuity earns 4% per year. (Assume end-of-period deposits and
compounding at the same intervals as deposits.) Round your answer to the
nearest cent. $__________
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