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M118 Final Review

1) Find the amount due on a loan of $8,500 at 12.5% simple interest at the end of 4 years.

2) If you pay $5,500 for a simple interest note that will be worth $6,000 in 21 months, what annual simple

interest rate will you earn? (Compute the answer to one decimal place.)

3) Construct the amortization table for a $1,000 debt that is to be repaid in 6 monthly payments at 1.24% interest

per month on the unpaid balance.

4) What amount will be in an account after 1.5 years if $4,000 is invested at 6% compounded semiannually?

5) How much should you invest now at 8% compounded semiannually to have $8,500 to buy a car in 2.5 years?

6) An investment company pays 12% compounded quarterly. What is the effective rate? (Compute the answer to

two decimal places.)

7) How many months will it take until an account will have $4,500 if $2,500 is invested now at 15% compounded

monthly?

8) What is the future value of an ordinary annuity at the end of 3 years if $200 is deposited each quarter into an

account earning 6% compounded quarterly?

9) An ordinary annuity has a value of $1,333.85 at the end of 4 years when $150 is deposited every 6 months into

an account earning 6% compounded semiannually. How much interest has been earned?

10) You deposit $130 each month into a savings account that pays 8.5% compounded monthly. How much

interest will you have earned after 8 years?

11) A company establishes a sinking fund to replace equipment at an estimated cost of $100,000 in 9 years. How

much should be invested each month into an account paying 12% compounded monthly in order to have

$100,000 in 9 years?

12) You can afford semiannual deposits of only $75 into an account that pays 15% compounded semiannually.

How many half years will it be until you have $10,000 to buy a car? (Round up to the next higher half if not an

integer.)

13) A couple decides on the following plan for their child's college education: When the child is 6 months old, and

every 6 months thereafter, they will deposit $310 into a savings account paying 9.5% interest compounded

semi-annually. After the child's tenth birthday (20 payments), they will stop making payments and let the

money earn interest, at the same rate (8 more years) until the child is 18 and ready for college. How much

money ( to the nearest dollar) will be in the account when the child is ready for college?

14) An individual makes annual year-end deposits of $500 into an ordinary annuity. After 10 years, the annuity

is worth $9,700. What annual rate (compounded annually) has this annuity earned? Solve graphically and

express the answer as a percentage, correct to two decimal places.

15) What is the present value of an ordinary annuity that pays $400 per quarter for 6 years if money is worth 9%

compounded quarterly?

Math Exam Final Review Worksheet With Answer Key - M118, Indiana University Southeast