# MATH 106 QUIZ 1 LATEST 2016

Question

1. (24 points) Considering a present value (principal) of $150, and an annual interest rate of 10%,

(a) Showing your work within applicable cells, and providing clarification, if necessary, fill in the cells

with values for each individual year in the following table where the present value is subject to two

different interest-bearing accounts: a simple-interest savings account and a compound-interest savings

account (interest compounded annually).

(b) Having observed the detailed (but simple) computations involved in the table, using appropriate

financial analysis formulas, and showing your formulas and work, determine the interest and future

value for a saving time (term) of three years for

(b1) the simple-interest savings account.

(b2) the compound-interest savings account.

Simple Interest Compound Interest

(Interest Compounded Annually)

Year Annual

Interest

Rate (%)

Present Value

(PV) or

Principal ($)

Interest ($) Future Value (FV)

or Amount ($)

PV Interest ($) Future Value (FV) or

Amount ($)

1

2

3

Total

Interest:

Total

Interest:

Please do not forget Part (b) of the problem, and show work.

2. (7 pts) A credit card balance is one month overdue and subject to an annual interest rate of

29%. If the interest charged for the credit card overdue balance in one month is 632.92, How

much is the overdue balance? Show work.

3. (7 pts) A payday loan is a small, short-term loan to a borrower, offered with the idea that it is

paid back quickly within the next pay period or so. Pay-Later Loans will provide a loan of

$1,500, to be paid back in 45 days with a fee of $240. (The fee is equivalent to an interest

charge). What is the annual rate of interest for this loan? (Assume simple interest with a 360 day

year.) Show work/explanation.

4. (7 pts) Kira arranges for an undisclosed dollar amount of home improvement work to be done

on her house, financed with payments of $816 per month for five and a half years. She paid a

total interest of $3728. Calculate the dollar amount Kira spent on home improvement? Show

work/explanation.

5. (12 pts) (a) Which investment is more advantageous? Show work/explanation.

Option 1: An investment with an annual interest rate of 10.2% and interest compounded semi-annually

or Option 2: An investment with an annual interest rate of 10.1% and interest compounded daily

(b)What is the basis for the comparison called and what does it actually represent? Briefly

explain.

6. (10 pts) A couple has set up a sinking fund in order to have the amount needed in 5 years for

the down payment on a house. The couple paid $3,476.72 quarterly into an account paying 5.8%

annual interest compounded quarterly. How much was the amount the couple needed to collect

via the sinking fund? Show work.

7. (25 pts)

Agatha makes a one-time deposit of $20,000 in a savings account at 3.6% annual interest

compounded monthly.

Bert deposits $600 into a savings account at the end of every month for 5 years at 3.6% annual

interest compounded monthly.

(a) How much will Agatha have in her account at the end of five years? Show work.

(b) How much will Bert have in his account at the end of five years? Show work.

(c) Who has more money, and how much more than the other, in her/his account at the end

of five years, Agatha or Bert? _______ How much more? _________ Show work.

(d) On average, what is the difference between the amounts of two accounts quarterly.

(Equally distribute the total difference over the number of quarters within the time

duration considered.) Show work.

(e) How much has each person earned in total interest, at the end of five years? Show work.

(f) Who earned more in total interest, and how much more than the other, Agatha or Bert?

_________ And how much more? _____________ Show work.

8. (32 pts) To purchase a house, a homebuyer takes out a mortgage, borrowing $285,000 at the

annual interest rate of 4.8%, compounded monthly for 30 years. (The problem has four parts.)

(a) Calculate the monthly payment. Show the formula used and how to carry out the

calculation.

(b) Showing your formula(s) and work below the table, complete the following table. (Round

amounts to the nearest cent.)

Show the calculations necessary to arrive at the entries in the table above.

(c) Calculate the total interest paid if the loan is held for the entire term. Show some work.

(d) (d1) Calculate the unpaid balance after 3 years. Show work.

(d2) What percentage of the amount borrowed is s

**20%**with the discount code: ESSAYHELP