MATH/STAT 170 Test 1, October 23, 2008
To get full credit for a problem you must both
check the value that is closest to the correct
answer
and
show work
, which means writing down the formulas being used.
Correct
formula/formulas with an incorrect answer are worth 4 points.
A correct answer with incorrect or
missing formulas is worth nothing.
Each problem is worth 13.5 pts.
1)
You receive an award that pays $1,000 at the beginning of year 0, $2,000 at the beginning of
year 1, and $3,000 at the beginning of year 2.
What is the present value of this award at 5%
interest per year?
a)
5600
b)
5700
c)
5800
d)
5900
e)
6000
2)
Huntington Bank offers an account that pays 3%, compounded daily.
Lafayette Bank offers an
account with the same annual effective rate, but compounded twice a year.
Lafayette Bank’s
nominal interest rate is i% per year, compounded twice a year.
Find i.
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 Fall '08
 Staff
 Formulas, Time Value Of Money, Debt, Interest, Lafayette Bank

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