Copy of ENGM603_EXAM_2_KEY - ENGM603 NAME EXAM 2 Spring...

ENGM603 EXAM 2 - Spring 2008
NAME: KEY
Part I Part II EXTRA
1 C 26 E 51 B CREDIT D
2 B 27 D 52 B
3 C 28 D 53 C
4 D 29 B 54 A
5 B 30 E 55 C -1 E
6 C 31 C 56 D
7 A 32 C 57 B
8 E 33 C 58 B
9 E 34 D 59 A
10 D 35 C 60 B
11 E 36 D 61 D -1 A
12 B 37 C 62 E -1 D
13 B 38 E 63 E
14 C 39 E 64 C
15 D 40 D 65 B
16 C 41 D 66 C
17 B 42 D 67 E
18 C 43 A 68 C
19 E 44 C 69 B -1 D
20 A 45 B 70 E
21 C 46 C 71 E
22 E 47 E 72 D
23 D 48 E 73 C
24 C 49 C 74 C
25 E 50 A 75 B
ELIMINATED

Computational Problems 2 points each 5/12/2009
NAME: KEY
51 You invest $10,000 today into a retirement account. You expect to earn 11 percent, compounded monthly,
on your money for the next 25 years. After that, you want to be more conservative, so only expect to earn
7 percent, compounded semi-annually. How much money will you have in your account when you retire
40 years from now, assuming that this is the only deposit you make into the account?
a. $397,062 Years 1-25
b. $433,590 Calculator EXCEL
c. $441,387 300 N 300
d. $443,908 0.92 I/Y 0.01
e. $483,928 -10000 PV -10000
0 PMT 0
FV $154,478.89
Solution
Years 26-40
Calculator EXCEL
30 N 30
3.5 I/Y 0.04
($154,478.89) PV ($154,478.89)
0 PMT 0
FV $433,590.36
Solution $433,590.36
52 Ten years ago, Frederico deposited $2,500 into an account, Five years ago, he added an additional
$2,500 to his account… He earned 8 percent , compounded quarterly, for the first five years
and 12 percent, compounded annually, for the last five years. How much money does Frederico
have in his account today?
a. $9,018.68 First 5 Years
b. $10,952.72 Calculator EXCEL
c. $11,192.81 N 20
d. $11,408.17 I/Y 0.02
e. $12,997.43 PV ($2,500.00)
PMT 0
FV $3,714.87
Solution
Second 5 Years
Calculator EXCEL
N 5
I/Y 0.12
PV ($6,214.87)
PMT 0
FV $10,952.72
Solution $10,952.72

53 Five years ago, your parents opened two savings accounts and deposited $5,000 in each account.
The first account was with The City Bank at 5 percent, compounded daily. The second account was with
The Country Bank at 6 percent, compounded annually. Which one of the following statements is true
concerning these accounts?
a. The City Bank account is currently valued at $6,416.79.
b. The City Bank has paid $529.11 more in interest than The Country Bank.
c. The Country Bank has paid $271.11 more in interest than The City Bank.
d. The Country Bank account is currently valued at $6,749.13.
e. The City Bank and The Country Bank have both paid the same total amount of interest.
The City Bank The County Bank
Input Values Input Values
Calculator EXCEL Calculator EXCEL
N 1825 N 5
I/Y 0 I/Y 0.06
PV ($5,000.00) PV ($5,000.00)
PMT 0 PMT 0
FV $6,420.02 $271.11 FV $6,691.13
Solution Solution
54 Fred has $1,500 today and wants $2,200 to buy some sound equipment. How long will Fred have to
wait to buy the equipment if he earns 5.5 percent compounded annually on his money?
a. 7.15 years Input Values
b. 7.21 years Calculator EXCEL
c. 7.35 years N 7.15
d. 7.48 years I/Y 0.06
e. 7.50 years PV ($1,500.00)
PMT 0
FV $2,200.00
Solution 7.15
55 How long will it take to quadruple your savings at 9 percent compounded quarterly?