open-end loan

Paper instructions:

Ex. 3 & 4

Question 22 4 points Save

A patio furniture set sells for $935.00 on the installment plan which includes the finance charge. The payment plan calls for 15% down and the balance in 12 equal payments. The amount of each payment is:

$89.60

$77.92

$66.23

$140.25

none of the above

Question 23 4 points Save

An example of an open-end loan is a:

credit card loan

home mortgage loan

major appliance loan

car loan

none of the above

Question 24 4 points Save

The installment price minus the down payment equals the:

carrying charge

total of installment payments

cash price

net price

none of the above

Question 25 4 points Save

The __________ __________ is the sum of the number of months remaining on a loan divided by the sum of the total number of months of the loan.

refund fraction

Rule of 78

constant ratio

finance charge

none of the above

Question 1 4 points Save

The amount of interest on an ordinary annuity of $11,600.00 for 5 years at 8% compounded semiannually is:

$23,269.60

$116,000.00

$23,296.60

$139,269.60

none of the above

Question 2 4 points Save

Brian made deposits of $2,225.00 at the end of each year for eight years. The rate was 10% compounded annually. The value of Brian’s annuity at the end of eight years is:

$5,218.95

$17,800.00

$25,445.10

$10,178.04

none of the above

Question 3 4 points Save

__________ is the present value of an annuity of $1,500.00 for 6 years at 6% compounded semiannually.

$12,576.00

$7,375.50

$8,125.50

$14,931.00

none of the above

Question 4 4 points Save

Which of the following is not an example of the use of a sinking fund?

pay an installment loan

pay for equipment replacement

pay for a new factory

retire bonds

none of the above

Question 5 4 points Save

The payments for an annuity due are made:

annually

at the beginning of the period

at the end of the period

every month

none of the above

Question 6 4 points Save

An annuity is:

never used by lotteries

not made up of equal payments

a lump sum payment

a stream of payments

none of the above

Question 7 4 points Save

The sum of the payments of an annuity plus the interest is called the:

economic sum

payoff amount

financial total

amount of the annuity

none of the above

Question 8 4 points Save

The present value of an ordinary annuity:

determines the amount of money that needs to be invested today

represents a lump sum payment

is equal to the amount of money invested in the future

can be determined only using the tables

none of the above

Question 9 4 points Save

What is the value of an annuity due at the end of 15 years of quarterly deposits of $2,000.00 with terms of 8% compounded quarterly?

$228,102.00

$232,665.14

$232,666.08

$228,120.00

none of the above

Question 10 4 points Save

How much should be invested today to provide $1,800.00 in one year? Assume 10% interest compounded annually.

$1,636.36

$1,782.00

$1,620.00

$493.15

none of the above

Question 11 4 points Save

If interest is compounded, the total amount at the end of the loan or investment term is called the:

future value

compound amount

present value

both A and B

none of the above

Question 12 4 points Save

Interest compounding:

calculates interest periodically

is done only once a year

calculates the present when the future is known

results in less interest than simple interest

none of the above

Question 13 4 points Save

The effective rate is:

the stated rate

the true semiannual rate

the annual percentage yield rate

the nominal rate

none of the above

Question 14 4 points Save

Don deposited $27,500.00 in Trader’s Bank at an interest rate of 12% compounded quarterly. (Use Table 13-1 from the textbook.) The effective rate was:

14.0%

12%

13%

12.55%

none of the above

Question 15 4 points Save

$15,000.00 for 10 years compounded at 10% quarterly results in how many periods?

20

10

120

40

none of the above

Question 16 4 points Save

The amount that must be invested today to yield a desired sum in the future is called:

compound total

compound interest

present value

future value

none of the above

Question 17 4 points Save

The compound interest on a $3,000.00 loan at 7% for 3 years compounded annually is:

$3,675.13

$630.00

$3,630.00

$675.13

none of the above

Question 18 4 points Save

Using Table 13-2, determine what $4,500.00 for 5 years at 7.25% compounded daily will grow to.

$6,385.95

$6,465.89

$6,358.59

$6,835.59

none of the above

Question 19 4 points Save

Bill took out a $125,000.00 mortgage on a lake house. The bank charged 2 points at the closing. The points amounted to:

$750.00

$7,500.00

$2,500.00

$5,000.00

none of the above

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