Review Ch. 6

# Review Ch. 6 - Chapter 6 Chapter 6 1 You decide to begin...

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Chapter 6 Chapter 6 1. You decide to begin saving towards the purchase of a new car in 5 years. If you put \$1,000 at the end of each of the next 5 years in a savings account paying 6% compounded annually, how much will you accumulate after 5 years? a. \$6,691.13 b. \$5,637.09 c. 1,338.23 d. \$5,975.32 e. \$5,731.94 2. Using the information in the previous problem, what would be the ending amount if the payments were made at the beginning of the year? a. \$6,691.13 b. \$5,637.09 c. 1,338.23 d. \$5,975.32 e. \$5,731.94 3. Using the information in the previous problem, what would be the ending amount if \$500 payments were made at the end of each 6 month period for 5 years and the account p aid 6% compounded semiannually? a. \$6,691.13 b. \$5,637.09 c. 1,338.23 d. \$5,975.32 e. \$5,731.94 4. You have applied for a mortgage of \$60,000 to finance the purchase of a new home. The bank will require you to make annual payments of \$7,047.55 at the end of each of the next 20 years. Determine the interest rate in effect on this mortgage. a. 8% b. 9.8% c. 10% d. 51% e. 11.2% 5. If you would like to accumulate \$7,500 over the next 5 years, how much must you deposit each six months, starting six months from now, given a 6% interest rate and semiannual compounding? a. \$1,330.47 b. \$879.23 c. \$654.23 d. \$569.00 e. \$732.67 6. A company is offering bonds that pay \$100 per year indefinitely. If you require a 12% return on these bonds what is the value of each bond? a. \$1,000 b. \$962 c. \$904.67 d. \$866.67 e. \$833.33 7. Today is your birthday, and you decide to start saving for your college education. You will begin college on your 18

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Review Ch. 6 - Chapter 6 Chapter 6 1 You decide to begin...

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