Quiz 1 solution - Quiz I Finance 3341 Section-Instructor...

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Example 1 Quiz I September 24, 2007 Finance 3341 Section --- Instructor: Nataliya Polkovnichenko Name: _________________________ Please do not open the examination until you are told to do so. Instructions: 9 The exam has 4 problems and 10 multiple-choice questions. 9 Total number of points is 100. 9 All books and notes MUST be closed. You may use your calculators. 9 The last page contains formulas that you may find helpful. You may detach the page with formulas. 9 For each of the multiple-choice questions, circle the best answer. You will not receive any points if you circle more than one answer. 9 Be neat and show ALL your work to receive full credit. Partial credit will be given. 9 You have 1 hour and 15 minutes to complete the exam. Do not consult with anyone while you are working on the exam. GOOD LUCK!!!
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Example 2 Multiple Choice Questions Circle the correct answer. Each of the correct answers is worth 4 points. 1. What will be the approximate population of the United States, if its current population of 280 million grows at a compound rate of 2% annually for 25 years? A) 413 million B) 430 million C) 460 million D) 488 million 2. The salesperson offers, “Buy this new car for $25,000 cash or, with appropriate down payment, pay $500 per month for 48 months at 8% interest.” Calculate the “appropriate” down payment, assuming that the salesperson does not offer a free lunch. A) $1,000.00 B) $4,520.64 C) $5,127.24 D) $8,000.00 3. How much more is perpetuity of $1,000 worth than an annuity of the same amount for 20 years? Assume a 10% interest rate and cash flows at end of period. A) $297.29 B) $1,486.44 C) $1,635.08 D) $2,000.00 4. Your car loan requires payments of $200 per month for the first year and payments of $400 per month during the second year. The annual interest rate is 12% and payments begin in one month. What is the present value of this two-year loan? A) $6,246.34
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Quiz 1 solution - Quiz I Finance 3341 Section-Instructor...

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