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Math 1313
Test 3 Supplemental Review
For questions 1 – 12, state the type of problem and calculate the answer.
1.
Parents of a college student wish to set up an account that will pay $350 per month to
the student for four years.
How much should they deposit now at 9% annual interest,
compounded monthly?
2.
A tractor costs $16,000.
You pay 25% down and finance the rest with equal monthly
payments of 6 years.
If you must pay 18% annual interest compounded monthly, what is
your monthly payment?
How much interest will you pay over the 6 years?
3.
What is the effective rate of interest for money invested at 10% annual interest
compounded monthly?
4.
A newborn child received a gift of $5000 towards a college education from her
grandparents.
How much will the gift be worth in 17years if it is invested at 9% annual
interest compounded quarterly?
5.
Your friend’s payments on his new car are $524.37 per month.
He received a $3000
tradein on his old car, and received a financing package that was 8.9% annual interest,
compounded monthly for five years.
What was the total purchase price of the car?
6.
A company estimates that it will have to replace a piece of equipment at a cost of
$10,000 in 5 years.
The owner wants to have this money available when the equipment is
replaced.
He can make fixed quarterly payments and earn interest at 6% annual interest
compounded quarterly.
How much should the payments be?
7. Cassie’s graduation is coming up.
She has decided to take a trip to Cancun after
graduation.
She anticipates she’ll need $2,000 for the hotel, air, and spending money.
How much should she deposit in an account that pays 10.56% per year compounded
monthly to have the funds available when she graduates in 2 years?
8.
Jenna wants to begin saving money for a new car.
She can make monthly payments of
$150 into an account at her credit union which pays 5% annual interest compounded
monthly.
How much money will she have available for her new car in three years?
9.
Jack and Jill bought a house costing $150,000.
They made a 20% down payment on
the house and financed the rest with a conventional mortgage for 30 years at 6.25%
annual interest, compounded monthly.
How much are their monthly payments?
10.
Betty and Bob would like to buy a house, but don’t have a down payment.
They
anticipate that they will need $20,000 cash to buy a house.
Their bank is paying 4.8%
annual interest compounded quarterly.
What should their quarterly payments be if they
wish to have the down payment in five years?
Math 1313 – Test 3 Supplemental Review
1
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View Full Document11.
A health club offers to let you join for $50 down and payments of only $36 per
month for 3 years.
When you read the fine print, you discover that the interest rate is
18% per year compounded monthly.
What is the cash price of the health club
membership?
How much will the club membership cost you after 3 years?
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 Spring '10
 AbdelnourAhmedZaid
 Math, Addition

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