4B practice  KEY
Show all work for credit. Round answers to two decimal places.
1.)
Dan deposits $100 each month into a retirement fund that pays 2.65% compounded monthly.
a)
How much will he have in the account when he retires after working for 35 years? (2 points)
PMT = 100
APR = 0.0265
n = 12
Y = 35
A
=
100
(1
+
0.0265
÷
12)
12 35

1
(0.0265
÷
12)
=
$69083.63
b)
How much interest will Dan have earned? (1 point)
Interest = Accumulated balance – total amount deposited
Total amount deposited = $100(12)(35) = $42000
Interest = 69083.63 – 42000 = $27083.63
2.)
A 30year $10,000 US Treasury Bond is quoted at 97.5 points with a current yield of 7.5%.
Find the
annual interest payment. (2 points)
annual interest = current yield
current price
current price
= 10000
0.975 =
9750
annual interest = 0.075
9750 = $731.25
3.)
Melissa buys 100 shares of XYZ stock for $50.25 per share.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview.
Sign up
to
access the rest of the document.
 Fall '08
 WOOLAND
 Dividend yield, share, annual dividend payment

Click to edit the document details