Unit 6 Practice Quiz

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Unit 6 Practice Quiz
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1. A deposit of 5000 is made in a trust fund
that pays 7.5 interest, compounded monthly. It
is specified that the balance will be given to
AMDM College after the money has earned interest
for 50 years. How much will AMDM College
receive?
Variable Value
N 0
I 0.00
PV 0.00
PMT 0.00
FV 0.00
P/Y 1
C/Y 1
end/begin 0
Variable Value
N 600
I 7.50
PV 5,000.00
PMT 0.00
FV (210,138.69)
P/Y 12
C/Y 12
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2. Courtney has a balance on her Super Duper
credit card of 7,000 that charges her 21
interest compounded monthly. If she pays 200 a
month, how long will it take Courtney to pay the
card off?
Variable Value
N 54.64633085
I 21.00
PV 7,000.00
PMT (200.00)
FV 0.00
P/Y 12
C/Y 12
end/begin 0

Years 4.55
Variable Value
N DIV/0!
I 0.00
PV 0.00
PMT 0.00
FV 0.00
P/Y 12
C/Y 12
end/begin 0
4
3. Woody and his wife want to finance 200,000
to buy a house. The mortgage company gives them
two options. The first option is 5.5 for 30
years and the second option is 5.5 for 15
years.What is the monthly difference in the two
plans?What is the total difference in the two
plans?
Variable Value
N 180
I 5.50
PV 200,000.00
PMT (1,634.17)
FV 0.00
P/Y 12
C/Y 12
end/begin 0
Variable Value
N 360
I 5.50
PV 200,000.00
PMT (1,135.58)
FV 0.00
P/Y 12
C/Y 12
end/begin 0
1,634.17 180 294,150.60
1,135.58 360 408,808.80
498.59 (114,658.20)
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4. Ten years ago, Josh put money into an account
paying 5.5 compounded monthly. If the account
has 12,000 now, how much money did he deposit?
N 120
I 5.50
PV (6,932.10)
PMT 0.00
FV 12,000.00
P/Y 12
C/Y 12
end/begin 0
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5. Stock Texas is worth 20.00 per share on
Monday. The interest rate drops on Tuesday, and
Stock Texas is worth 35.00 per share.What
type of relationship exists between Stock Texas
and Interest Rates?
As the interest rate drops, the price
Since the variables are going in opposite
directions this is an inverse relationship.
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6. On Wednesday, Bond Math has the best risk
rating, Aaa, at a price of 36. On Thursday, the
risk rating drops to a lower rating of Aa, and
the price drops to 32. What type of relationship
can you assume that the price of Bond Math has
with its risk ratings?
As the risk rating drops, the price
Since the variable are going in the same
direction this is a direct relationship.
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7. Stock Bio has a price of 36 per share when
Bond Math has a price of 20 per bond.Use an
equation modeling the inverse variation between
the stock and bond prices to predict the price of
Stock Bios when Bond Math is worth 80?
Let B Bond, S Stock and K some Constant
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8. Bennys credit card APR is 20 compounded
daily. What is his actual interest rate per
yearthat is, his EAR?
10
9. Marley has a credit card with an APR of 20
and a current balance of 12,000.00. Assume that
the minimum payment is determined by 3.5 of the
balance.

• a. What is Marleys minimum payment?

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9. Marley has a credit card with an APR of 20
and a current balance of 12,000.00. Assume that
the minimum payment is determined by 3.5 of the
balance.

• b. If Marley pays 400 a month until the debt is
  retired how long will it take her to pay off the
  debt?

Variable Value
N 44.09380424
I 22.13
PV 12,000.00
PMT (400.00)
FV 0.00
P/Y 12
C/Y 12
end/begin 0
Variable Value
N 41.93444966
I 20.00
PV 12,000.00
PMT (400.00)
FV 0.00
P/Y 12
C/Y 12
end/begin 0
3.49 Years
3.67 Years
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9. Marley has a credit card with an APR of 20
and a current balance of 12,000.00. Assume that
the minimum payment is determined by 3.5 of the
balance.

• c. How much interest will Marley pay with this
  plan?

41.93444966(400) 16,773.80
Variable Value
N 41.93444966
I 20.00
PV 12,000.00
PMT (400.00)
FV 0.00
P/Y 12
C/Y 12
end/begin 0
16,773.80 12,000.00
4,773.80