134A07M1v1

134A07M1v1 - Economics 134a Midterm Exam 1 Summer 2007...

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Economics 134a Midterm Exam 1 Summer 2007 Version 1 Name: _________________________________________ Perm: __________________________________________ Questions 1 – 10 are multiple choice, worth 7 points each. Questions 11 – 13 are worth 10 points each. For any calculations, please show your work .
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You borrow $5,600 to buy a car. The terms of the loan call for monthly payments for four years at an APR of 5.9%. What is the amount of each payment? a. $103.22 b. $103.73 c. $130.62 d. $131.26; 5600 = C A(r=.059/12, t=48) e. $133.04 2. Today, you signed loan papers agreeing to borrow $4,954.85 at 9% compounded monthly. The loan payment is $143.84 a month. How many loan payments must you make before the loan is paid in full? a. 10 b. 20 c. 30 d. 40; 4954.85 = 143 A(r=.09/12, t) solve for t e. 50 3. The Bluebird Company has a $10,000 liability it must pay three years from today. The company is opening a savings account so that the entire amount will be available when this debt needs to be paid. The plan is to make an initial deposit today and then deposit an additional $2,500 a year for the next three years, starting one year from today. The account pays a 3% rate of return. How much does the Bluebird Company need to deposit today? a. $1,867.74 b. $2,079.89; 10000/1.03 3 = C + 2500 A(r=.03, t=3) c. $3,108.09 d. $4,276.34 e. $4,642.28 4. You just paid $350,000 for a policy that will pay you and your heirs $12,000 a year forever. What rate of return are you earning on this policy? a.
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134A07M1v1 - Economics 134a Midterm Exam 1 Summer 2007...

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