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Practice Test 3
Question 1
A problem is listed below. Identify its type.
Craig bought a new boat. He made a 19% down payment. He financed the rest
through his bank for 5 years. His bank charged 6% per year compounded monthly and
his monthly payments were $300. What was the original price of the boat?
a)
Sinking Fund
b)
Present Value of an Annuity
c)
Present Value
d)
Amortization
e)
Future Value of an Annuity
f)
None of the above.
Question 2
How much should new parents invest now at 6% per year compounded quarterly to
have $30,000.00 towards their child's college education in 9 years?
a)
$17,549.69
b)
$17,556.69
c)
$17,552.69
d)
$17,550.69
e)
$17,554.69
f)
None of the above.
Question 3
John got a part time weekend job at a local restaurant to save for a new car. He plans
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Page 1 of 12
Print Test
10/26/2010
https://assessment.casa.uh.edu/Assessment/PrintTest.htm
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View Full Documenton depositing $110 per month for the next 2 years in a savings account with a rate of
7% per year compounded monthly. How much will he have saved toward his down
payment at the end of the 2 year period?
a)
$2,854.91
b)
$2,814.91
c)
$2,794.91
d)
$2,824.91
e)
$2,834.91
f)
None of the above.
Question 4
A problem is listed below. Identify its type.
John bought a new house. He made a $5,000 down payment and financed the rest,
$200,000, through his credit union. The credit union charged him 13% per year
compounded monthly for 22 years. How much were his monthly payments?
a)
Present Value
b)
Amortization
c)
Present Value of an Annuity
d)
Sinking Fund
e)
Future Value with compound interest
f)
None of the above.
Question 5
The manager of a manufacturing company knows that they will need a new machine in
one of their factories. The new machine will cost them $12,500. The manager has
determined that they can afford to pay 20% of the cost of the machine in cash. They
can then finance the rest through a credit union. The credit union will charge 1% per
year compounded monthly. How much are their monthly payments for 4 years?
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 Spring '08
 CONSTANTE
 Math

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