If you can\'t see the graph for #5, just skip. For whatever reason I\'m having a

Question

If you can't see the graph for #5, just skip. For whatever reason I'm having a bit of an issue with those! :(

QUESTION 1

Your credit card charges a 21% nominal annual interest rate on unpaid balances. If interest is compounded continuously, the effective annual interest rate =

1.75%

21.0%

23.1%

23.4%

QUESTION 2

You plan to spend $300 for gasoline in February, $350 in March, and $400 in April. If this is January, the present worth of your planned gasoline purchases can be found by which formula if the interest rate = ½% per month?

P = 50(P/G,½%,3)

P = 300(P/G,½%,3)(50(A/G,½%,3)

P = 300(P/A,½%,3) + 50(P/G,½%,3)

P = 300(P/G,½%,3)

QUESTION 3

You plan to spend $300 for gasoline in February, $350 in March, and $400 in April. If this is January, the present worth of your planned gasoline purchases can also be found by which formula if the interest rate = ½% per month?

P = 1050(1.005)3

P = 300 + 350(1.005) + 400(1.005)2

P = 300(1.005) + 350(1.005)2 + 400(1.005)3

P = 300(1.005)-1 + 350(1.005)-2 + 400(1.005)-3

QUESTION 4

Your credit card charges a 21% nominal annual interest rate on unpaid balances. If interest is compounded daily, the effective annual interest rate =

1.75%

21.0%

23.1%

23.4%

1 points   

QUESTION 5

Based on this cash flow diagram, what is a correct specification? (added to bottom maybe?)

X = 20(P/A,6%,4)(P/F,6%,4) + 20(P/G,5%,4)

X = 20(P/A,4%,6) + 20(P/G,4%,4)

X = 20(P/A,6%,4) + 20(P/G,6%,4)

X = 20(P/G,6%,4)

QUESTION 6

You plan to spend $300 for gasoline in February, $350 in March, and $400 in April. If this is January and monthly interest is 1/2%, the present worth of your planned gasoline purchases =

$742

$758

$1039

$1050

QUESTION 7

You save $3000 in Year 1, $2500 in Year 2, and $2000 in Year 3. If i = 10%, which specification is NOT correct for calculating the future worth of this saving at the end of Year 3?

F = 3000(F/A,10%,3) – 500(P/G,10%,3)(F/P,10%,3)

F = 3000(F/A,10%,3) – 500(P/G,10%,3)

F = 3000(F/A,10%,3) – 500(A/G,10%,3)(F/A,10%,3)

F = 3000(F/P,10%,2) + 2500(F/P,10%,1) + 2000

QUESTION 8

You borrow $8000 at an nominal interest rate of 6%. If you repay this loan quarterly, making 4 payments per year, the effective annual rate =

1.5%

6.0%

6.14%

6.86%

QUESTION 9

Which of the following is correct?

Geometric gradients change by a constant percentage over time

Geometric gradients change by a constant amount over time

Geometric gradients change by a factor of (i-g) over time

Geometric gradients are the inverse of arithmetic gradients

QUESTION 10

Your credit card charges a 21% nominal annual interest rate on unpaid balances. If interest is compounded monthly, the effective annual interest rate =

1.75%

21.0%

23.1%

23.4%

QUESTION 11

You plan to spend $300 for gasoline in February, $350 in March, and $400 in April.

G = 50

G = 300

G = 400

G = 1050

QUESTION 12

You expect to save $3000 in Year 1, $2500 in Year 2, and $2000 in Year 3. If i = 10%, the future worth of your savings at the end of Year 3 =

$7500

$7940

$8084

$8380

Maybe the graph to #5 below?

a.

1.75%

b.

21.0%

c.

23.1%

d.

23.4%

80 60 40 20

Explanation / Answer

Ans 1 - 23.4%

Ans 2 - P = 300(P/A,½%,3) + 50(P/G,½%,3)

Ans 3 - P = 300(1.005) + 350(1.005)2 + 400(1.005)3

Ans 4 - 23.1%

Ans 5 - X = 20(P/A,6%,4) + 20(P/G,6%,4)

Ans 6 - $1039

Ans 7 - F = 3000(F/A,10%,3) – 500(A/G,10%,3)(F/A,10%,3)

Ans 8 - 6.14%

Ans 9 - Geometric gradients change by a factor of (i-g) over time

Ans 10 - 23.4%

Ans 11 - G = 50

Ans 12 - $8380

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