FIN 3414
Examination II
Spring 2012
1. Ms. R. Goslin has applied for a revolving credit line of $ 7 million to assist in marketing
a new product line. The terms of the loan will be as follows:
(a) All the loans will be discount loans.
(b) A commitment fee
FIN 3414
Examination II
Fall 2010
Problem 1 to 4: use the following information:
Ms. Goldstein has applied for a revolving credit line of $ 4 million to assist in marketing a new product line. The terms
of the loan will be as follows:
(a) All the loans wi
FIN 3414
Examination II
Fall 2011
1. Ms. Silverstein has applied for a revolving credit line of $ 4 million to assist in marketing a new product line. The
terms of the loan will be as follows:
(a) All the loans will be discount loans.
(b) A commitment fee
Chapter Three
SIMPLE RATE OF INTEREST
FUTURE VALUE OF AN AMOUNT
Let a principal amount $P be deposited in an account that has a stated or nominal interest rate of k or 100k percent
per annum. What will be the future value of these P dollars if left in the
Chapter Eight
SPECIAL TOPICS IN TIME VALUE OF MONEY
In this and following chapter we deal with some of the unconventional topics that are usually not found in the time value of
money chapters in standard finance textbooks. This Chapter deals with the foll
Chapter Eleven
Commercial Mathematics II
In the previous chapter, we developed the general loan pricing formula and used those formulae to develop special cases. Here
in this chapter we provide a description of some other types of loan.
ADD-ON INTEREST LO
FIN 3414
Quiz 4: Chapter 6, 7 and 8
Spring 2012
1. Suppose 20 years ago your mother deposited $ 2,500 in an account earning 12% per
annum. Obtain todays value, assuming semiannual compounding.
a.
b.
c.
d.
e.
25,712.29
25,714.29
25,716.29
25,718.29
None of
CHAPTER 2
I: THE TIME VALUE OF MONEY Conventions & Definitions
Introduction
Beginning this chapter, we are going to learn one of the most important topics in finance, the time value of money.
Note that almost every course, which you will take as finance m
FIN 3414
Quiz 6: Chapters 11 and 12
Spring 2012
1. What must be the end-of-the-month mortgage payment amount required to repay a loan
of $52,000 in 25 years? Assume k = 0.14 (14 %) with monthly compounding.
a.
b.
c.
d.
e.
622
624
626
628
None of the above
CHAPTER 10
1. Ms. Silverstein has applied for a revolving credit line of $ 4 million to assist in marketing a new product line. The terms of the
loan will be as follows:
(a) All the loans will be discount loans.
(b) A commitment fee of 1 percent on the un
FIN 3414
Examination I Version A
Fall 2011
1. You inherited $55,000 from Auntie Paris. What is the maximum amount you can
withdraw each year forever if the interest rate is 7.5%?
a.
b.
c.
d.
e.
4,125
4,225
4,325
4,425
None of the above
Solution: The answe
Chapter Five
TIME VALUE OF MONEY WITH AN ANNUITY
FUTURE VALUE OF AN ANNUITY
Let n equal deposits of an amount A are made at the beginning of each year.
What would be the future value of this annuity if the annual rate of interest is k?
The mathematical fo
FIN 3414- Quiz 3: Chapter 4 and 5 Spring 2012
1. Suppose 20 years ago your mother deposited $ 2,500 in an account earning 12% annually. Obtain todays value.
a. 24,115.73
b. 24,116.73
c. 24,117.73
d. 24,118.73
e. None of the above
N = 20
I/Y = 12
PV = -2,5
FIN 3414
Quiz 4: Chapter 6, 7 and 8
Spring 2012
1. Suppose 20 years ago your mother deposited $ 2,500 in an account earning 12% per annum. Obtain todays value,
assuming semiannual compounding.
a. 25,712.29
b. 25,714.29
N = 20
I%=12
PV= -2,500 C/Y=2 for CP
FIN 3414
Quiz 1: Chapter 1 and Syllabus
Spring 2012
1. S=1+3+9+27+81+
a.
b.
c.
d.
e.
121
2,000
3,000,000
Infinity
None of the above
D
Solution: Since series never ends and the values of the terms keep increasing the answer is
infinity
2.
a.
b.
c.
d.
e.
30
Problems
1. In how many years $100 will become $265 if k = 11%?
2. In how many years will an amount double if k = 7.6%?
3. In how many years will an amount triple if k = 9%?
4. At what rate of interest $100 will become $265 in 20 years?
5. At what rate of
Chapter Twelve
I. Introduction
MORTGAGE MATHEMATICS 3
When one buys a real property (e.g., land, house, or commercial property), three main questions are usually asked. First, given
the rate of interest and term to maturity on the loan, what will be the a
FIN 3414
Quiz 2: Chapter 2 and 3
Spring 2012
1. How will you enter 10% in a computational formula?
a. As 110
b. As 10
c. As 0.10
d. As 1.10
e. None of the above
C
Solution:
2. What is the future value of $12 deposited today in 5 years when earning 6% simp
Problem 1 and 2: use the following information.
Fine Ants Inc. is considering a project to produce super ants.
It is estimated that the initial cost of the equipment, including transportation, installation, and so forth, will be $28,000.
Fine Ants also es
Name: _ Panther ID: _
FIN 3414
Quiz 4: Chapter 6, 7 and 8
Spring 2012
1. Suppose 20 years ago your mother deposited $ 2,500 in an account earning 12% per
annum. Obtain todays value, assuming semiannual compounding.
a.
b.
c.
d.
e.
25,712.29
25,714.29
25,71
FIN 3414
Quiz 5: Chapter 10
Spring 2012
Problem 1 to 10: use the following information:
Mr. Fernandez has applied for a revolving credit line of $ 6 million to assist in marketing a new product line. The terms of the loan
will be as follows:
(a) All the l
FIN 3414
Quiz 5: Chapter 10
Spring 2012
Problem 1 to 10: use the following information:
Mr. Fernandez has applied for a revolving credit line of $ 6 million to assist in marketing
a new product line. The terms of the loan will be as follows:
(a) All the l
CHAPTER 10
1. Ms. Silverstein has applied for a revolving credit line of $ 4 million to assist in marketing a new product line. The terms of the
loan will be as follows:
(a) All the loans will be discount loans.
(b) A commitment fee of 1 percent on the un
FIN 3414
Quiz 6: Chapters 11-12
Spring 2012
1. What must be the end-of-the-month mortgage payment amount required to repay a loan of $52,000 in 25 years?
Assume k = 0.14 with monthly compounding.
a. 622
b. 624
c. 626
N = 25 * 12 = 300
I/Y = 14 / 12 = 1.16
Problem 1 and 2: use the following information.
Fine Ants Inc. is considering a project to produce super ants.
It is estimated that the initial cost of the equipment, including transportation, installation, and so forth, will be $28,000.
Fine Ants also es
FIN 3414
Quiz 3: Chapter 4 and 5
Spring 2012
1. Suppose 20 years ago your mother deposited $ 2,500 in an account earning 12%
annually. Obtain todays value.
a.
b.
c.
d.
e.
24,115.73
24,116.73
24,117.73
24,118.73
None of the above
(
Solution:
)
A
or PV=-2,5
Chapter Seven
CONTINUOUS COMPOUNDING
In previous sections, the case of m compoundings per year was discussed. In the case of continuous compounding,
m is allowed to tend to infinity. The mathematical relationships are fairly easy to obtain.
Making use of
Chapter Four
THE TIME VALUE OF MONEY WITH ANNUAL COMPOUNDING
By convention, the interest rate is always quoted in annual terms, but the compounding interval can be of any length
of time. Typically, it is less than or equal to a year. The mathematical form
Name: _ Panther ID: _
FIN 3414
Quiz 6: Chapters 11 and 12
Spring 2012
1. What must be the end-of-the-month mortgage payment amount required to repay a loan
of $52,000 in 25 years? Assume k = 0.14 with monthly compounding.
a.
b.
c.
d.
e.
622
624
626
628
No
FIN 3414
Examination II
Spring 2012
1. Ms. R. Goslin has applied for a revolving credit line of $ 7 million to assist in marketing a new product line.
The terms of the loan will be as follows:
(a) All the loans will be discount loans.
(b) A commitment fee
Chapter Ten
COMMERCIAL MATHEMATICS I
Financial institutions such as commercial banks, savings and loan associations, and credit unions, provide loans to individuals
and corporations and offer several types of savings instruments. The types of loans provid
FIN 3414-Quiz 2: Chapter 2 and 3-Spring 2012
1. How will you enter 10% in a computational formula?
a. As 110
b. As 10
c. As 0.10
d. As 1.10
e. None of the above
2. What is the future value of $12 deposited today in 5 years when earning 6% simple rate of i
FIN 3414-Intermediate Finance Chapter 11 Commercial Mathematics
Chapter Eleven
Commercial Mathematics II
In the previous chapter, we developed the general loan pricing formula and used
those formulae to develop special cases. Here in this chapter we provi