MGT 3078 FINANCIAL MANAGEMENT SPRING 2011 QUIZ 1
Choose the BEST answer to each question. Bubble in your answer on the form provided. If you feel the answer is not provided, show your work, explain your
assumptions, and write your answer on the exam. Remove all hats and dark glasses. If you have to go to the restroom, go now. No electronic devices allowed. You may
not use your cell phone as a calculator. As a courtesy to your classmates, no questions are allowed after the initial instructions are given.
I certify by my signature that:
the work on this exam is my own without any outside assistance,
that I did not provide assistance to another classmate,
that I used no electronic devices for information storage, retrieval, or communications,
that I have abided by the Georgia Tech honor code in the preparation and execution of this exam.
I further understand that my professor will do everything within his power to expel me from Georgia Tech if I am found in violation of the Georgia Tech
1. You just won the grand prize in a national writing contest! As your prize, you will receive $2,000 a month for ten years. If you can earn 7 percent
on your money, what is this prize worth to you today?
2. This morning, you borrowed $150,000 to buy a house. The mortgage rate is 7.35 percent. The loan is to be repaid in equal monthly payments over
20 years. The first payment is due one month from today. How much of the second payment applies to the principal balance? (Assume that each
month is equal to 1/12 of a year.)
3. You are borrowing $17,800 to buy a car. The terms of the loan call for monthly payments for 5 years at 8.6 percent interest. What is the amount of
4. Your credit card company quotes you a rate of 17.9 percent. Interest is billed monthly. What is the actual rate of interest you are paying?
A. 19.72 percent
B. 19.44 percent
C. 19.57 percent
D. 19.21 percent
E. 19.03 percent
THE BUSINESS SCHOOL AT GEORGIA TECH
Barry Marchman, Ph.D.