Math 179 – Finance Review

  1. The equation models an investment of $ ______, invested at _____% simple interest, for _____ years. The balance in the account at that time will be $______.
  1. The equation 10,000 models a loan of $______, borrowed at _____% interest, compounded ______ly, to be paid ______ly for _____ years. The size of payment needed is $______.
  1. The equation 1,000,000 = Pmt models a retirement annuity account paying _____% interest, compounded ______ly. Payments of $______will be made ______ly for ______years. The balance at retirement will be $______.
  1. Interpret the following TVM Solver screen.

N = 16
I% = 6
PV = - 8000
Pmt = 0
FV = ?
P/Y = 4
C/Y = 4 / This screen models an investment or loan (circle one) of $ ______, at ______% interest, compounded ______ly for ______years. Interest is paid / charged on a ______ly basis. The balance at the end is $ ______.
  1. The equation FV = 120 models an annuity with ______ly payments of $______made into an account earning ______% interest, compounded ______ly, for ______years. The account will have a balance of $______at that time.
  1. Which is the better investment rate: 4% compounded weekly or 4.1% compounded monthly? Why?
  1. Ken buys a refrigerator with an 6% added-on interest loan of $950 with no money down. He wants to pay his loan off in one year. What would his monthly payments be?
  1. Diana invested $2100 in an account earning 4.1% interest, compounded annually. What was her balance after 6 years?
  1. Pat deposits $75 each month into an account earning 4.8%, compounded monthly, for 8 years. How much will she have at the end of this time?
  1. Lavon wants to have a $70,000 retirement fund after 25 years. How much will she need to deposit now if she can obtain an APR of 13.2%, compounded daily? How much will she earn in interest?
  1. Julie sets up a new IRA that pays an APR of 9%, compounded annually. If she contributes $2500 annually for 30 years, how much will the IRA contain? How much interest will she have earned?
  1. Cynthia has taken out a 30-year fixed rate home mortgage of $87,000 at a rate of 7.2%, compounded monthly. What are her monthly payments? How much interest will she pay over the life of the loan?
  1. Rachel wants her son’s college fund to contain $30,000 after 18 years. If she can get an APR of 8.5%, compounded monthly, how much should she deposit at the end of each month?
  1. Kerry invested $1900 in an account that earns 5.3% simple interest. What is her balance after 40 months?
  1. Moses applied for a 7-year discount car loan of $10,000 with an APR of 5%. What is the size of his monthly payments?
  1. Ken can afford to pay $350 per month for 5 years for a new car. If financing can be arranged for 4.2%, compounded monthly, what price car can Ken afford with a $2000 down payment?
  1. Kolby pays $547.98 per month for his house mortgage of $70,000, borrowed for 20 years at interest, compounded monthly. Complete the amortization schedule through the third payment.

Pmt number / Payment Size / Interest Pmt / Principal pmt / Balance
0 / X / X / X / 70,000
1
2
3