Chapter 5:
Math of Finance Problems
Identify the type of problem.
1.
Anna wants to have $5,000 saved when she graduates from college so that she will
have a down payment for a new car.
Her credit union pays 5% annual interest
compounded monthly.
How much money should she deposit each month to have the
money available when she graduates in 3 years?
2.
Bill bought a new car.
His financing deal was a 5 year loan at 9.98% annual interest
compounded monthly.
His monthly payment was $421.25 and he paid no money down.
What was the total purchase price of the car?
3.
Sergio wants to have $5,000 in the bank in 3 years to pay for an Alaskan cruise.
How
much cash should he deposit today, if the bank pays 4% annual interest compounded
quarterly, if he wants to be sure to have the funds available in 3 years?
4.
Edwin and Frances are buying a new home.
The purchase price is $155,000.
They
will make a 10% down payment on the house.
Their loan for the house is a 30 year
conventional loan at 6.75% per year compounded monthly.
Find their monthly payment.
5.
Grace decides to start a savings program when she gets her first job after graduation.
She deposits $2,500 into her credit union savings account.
The credit union pays 3.8%
annual interest compounded quarterly.
How much money will she have in the account
after 4 years?
6.
Helen bought a new computer.
The finance company charged her 15% per year
compounded monthly.
Her monthly payments were $88.23 for 2 years and she made no
down payment.
What was the original price of the computer?
7.
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 Fall '10
 AbdelnourAhmedZaid
 Math, Time Value Of Money, Mortgage loan, Credit rating, Dean

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