Question : 21.You want to buy a new plasma television in 3 : 1325654

 

21.You want to buy a new plasma television in 3 years, when you think prices will have gone down to a more reasonable level. You anticipate that the television will cost you $2,500. If you can invest your money at 8% compounded monthly, how much do you need to put aside today?

a.$1,895.37

b.$1,968.14

c.$1,984.58

d.$2,158.42

22.You found your dream house. It will cost you $175,000 and you will put down $35,000 as a down payment. For the rest you get a 30-year 6.25% mortgage. What will be your monthly mortgage payment (assume no early repayment)?

a.$729

b.$862

c.$389

d.$605

23.You want to buy a new car. The car you picked will cost you $32,000 and you decide to go with the dealer’s financing offer of 5.9% compounded monthly for 60 months. Unfortunately, you can only afford monthly loan payments of $300. However, the dealer allows you to pay off the rest of the loan in a one time lump sum payment at the end of the loan. How much do you have to pay to the dealer when the lump sum is due?

a.$14,000.00

b.$21,890.43

c.$25,455.37

d.$22,071.75

24.You are planning your retirement and you come to the conclusion that you need to have saved $1,250,000 in 30 years. You can invest into an retirement account that guarantees you a 5% return. How much do you have to put into your account at the end of every month to reach your retirement goal?

a.$1567.86

b.$1,501.94

c.$3,472.22

d.$2,526.27

25.When you retire you expect to live for another 30 years. During those 30 years you want to be able to withdraw $4,000 at the beginning of every month for living expenses. How much money do you have to have in your retirement account to make this happen. Assume that you can earn 8% on your investments.

a.$545,133.98

b.$1,440,000.00

c.$548,768.20

d.$673,625.34

26.If you were to invest $120 for two years, while earning 8% compound interest, what is the total amount of interest that you will earn?

a.$139.97

b.$139.20

c.$19.20

d.$19.97

27.If you were to invest $120 for two years, while earning 8% simple interest, what is the total amount of interest that you will earn?

a.$139.97

b.$139.20

c.$19.20

d.$19.97

28.If the rate of interest that investors can earn on a 2-year investment is zero then

a.you will repay the same amount of money at the conclusion of a loan that you borrowed at the beginning of the 2 year loan.

b.the “cost” of using money for 2 years is zero.

c.you will receive the same amount of money at maturity that you invested at the beginning of a 2 year investment.

d.all of the above.

29.In the equation below, the exponent “3” represents

 

$133.10 = $100 ? (1 + .1)3

a.the future value of an investment.

b.the present value of an investment.

c.the annual rate of interest paid.

d.the number of periods that the present value is left on deposit.

30.You are asked to choose between a 4-year investment that pays 10% compound interest and a similar investment that pays 11.5% simple interest. Which investment will you choose?

a.the 10% compound interest investment

b.the 11.5% simple interest investment

c.you are indifferent between the investment choices

d.there is not enough information to answer the question

 

 

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