VIEWS: 11 PAGES: 1 POSTED ON: 11/5/2011
FINANCE 101 – QUIZ 2: REVIEW PROBLEMS 1. Ten years ago today, you deposited $8,520 in an account that pays 4% compounded annually. If you left that money in the account and reinvested all the interest, it would be worth? 2. You bought a security that will pay you $150,000 5 years from now. If the annual rate of return you can obtain is 5 ½%, what would be the value of this annuity today? 3. You are considering the purchase of a house and the asking price is $225,000, which requires a 10% down payment. If you can obtain a mortgage for 4 ¾, over 25 years, with monthly payments, how much would your monthly payment be? 4. You can afford $250 per month for a new car. If you can obtain a loan at an interest rate of 6 ½%, over 72 months, what is the maximum you can borrow? 5. You’ve just landed your first job and you have plans to begin a retirement account by depositing $500 per month into an account that will yield 8% per year. If you continue to save this amount for 40 years, how much will you have when you retire? 6. You will receive a single payment of $30,000, 10 years from now. If the present value is $18,300, what is the appropriate discount rate? 7. Berkshire Hathaway stock sold for $3,000 per share twenty years ago. If it currently sells for $125,000, what was the rate of return for the last 20 years? 8. An annuity pays $2,000 every quarter for twenty years. The annual interest rate is 6%, compounded quarterly. The present value of the annuity to the nearest dollar is? 9. The rate of interest agreed upon contractually charged by a lender or promised by a borrower is the _________ interest rate. 10. The rate of interest actually paid or earned, also call the annual percentage rate (APR), is the _____________ interest rate.
"Extra FINANCE 101 – QUIZ"