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# Find the total amount paid for the purchase

Dr. K. Thengumthara Name:

MATH106 Fall 2018 QUIZ 1

INSTRUCTIONS:

• This quiz covers week 1 material and is worth 100 points.

• When there are calculations involved, you should show the formula involved, how you came up with your answers with all the work. Express your answer using right units and

round the final answers to two decimal places.

• The quiz is open book and open notes. This means that you may refer to your textbook, notes, and online course materials, but you must work independently and may not

consult anyone.

• A brief honor statement is given below. Please sign it before you submit the Quiz. If you fail to sign the statement, your quiz will not be accepted. You may take as much time as

you wish, provided you turn in your quiz as a single pdf document via LEO by 11:59 pm

EDT on Sunday, November 4.

• ******************************************************************************

I have completed this assignment myself, working independently and not consulting anyone.

Signature: _____________________

******************************************************************************

*******

1. \$13,000 is invested for 8 years at annual simple interest rate of 15%.

(a) How much interest will be earned? (5points)

(b) What is the future value of the investment? (5points)

2

2. What interest will be earned if \$6100 is invested for 6 years at 13% compounded monthly?

(10 points)

3. What lump sum does Diana need to deposit in an account earning 9%, compounded quarterly,

so that it will grow to \$70,000 in 10 years? (10 points)

4. Find the future value of an ordinary annuity of \$70 paid quarterly for 5 years, if the interest

rate is 7%, compounded quarterly. (10 points)

3

5. Peter is saving to buy a car by depositing \$250 at the end of each month in an account that

pays 4.8% compounded monthly. What will the final amount be in 5 years? (10 points)

6. Juanita Domingo’s parents want to establish a college trust for her. They want to make 16

quarterly withdrawals of \$2500, with the first withdrawal 3 months from now. If money is

worth 6.5%, compounded quarterly, how much must be deposited now to provide for this trust?

(10points)

4

7. A sinking fund is established to discharge a debt of \$60,000 in 15 years. If deposits are made

at the end of each 6-month period and interest is paid at the rate of 8%, compounded

semiannually, what is the amount of each deposit? (10points)

8. If a bank pays 3.25% compounded monthly, what is the effective interest rate? (round your

final answer to 2 decimal places) (10points)

5

9. A recent graduate’s student loans total \$15,000. If these loans are at 5%, compounded

quarterly, for 12 years, what are the quarterly payments? (10points)

10. John buys a house for \$370,000. He makes a \$150,000 down payment and amortizes the rest

of the purchase price with semiannual payments over the next 13 years. The interest rate on the

debt is 10%, compounded semiannually.

(a) Find the size of each payment. (5points)

(b) Find the total amount paid for the purchase. (3points)

(c) Find the total interest paid over the life of the loan. (2points)