COMM 308 MIDTERM ACTUAL QUESTIONS AND
ANSWERS CONCORDIA UNIVERSITY
Question 1
What would be your required monthly payments on a five year loan
for a $50,000 boat, requiring a down payment of $5,000, if
payments are due at the end of each month and the interest rate is
8% compounded annually?
a.$912
.44
b.$925
.03
c.$906
.44
d.$912
.27
Answer: c
*Question 2
Jan plans to invest $2000 in an equity fund every year end beginning
this year. The expected annual return on the fund is 15 percent.
How much would she expect to have at the end of 20 years?
a. $176424
b. $204887
c. $178424
d. $237620
Answer: b
Question 3
,In 30 years, you plan to set up a fellowship fund for your university
that pays out $100,000/year in perpetuity with an annually
compounded discount rate of 5%. In order to set up the fund in 30
years, how much do you need to save each year (starting this year)
assuming you can get a semi-annually compounded return of 10% on
your savings for the next 30 years?
a. $66,666.67
b. $11,595.56
c. $21,215.49
d. $30,744.90
e. $30,000.00
Answer: b
, Question 4
The R&M Bank currently offers an investment account with an
interest rate of 8% compounded semi- annually. R&M wants to offer
customers another account with interest compounded monthly. If
R&M wants the effective rates to be equal, what interest rate should
R&M quote for the second account?
a. 7.87%
b. 8.00%
c. 8.16%
d. 24.00%
Answer
:a
Questi
on 5
The R&M Bank currently offers an investment account with an
interest rate of 6% compounded monthly. R&M wants to offer
customers another account with interest compounded quarterly. If
R&M wants the effective rates to be equal, what interest rate should
R&M quote for the second account?
a. 2.00%
b. 6.00%
c. 6.03%
d. 6.17%
Answer
:c
Questi
on 6
Amir has obtained a $250,000 mortgage. The mortgage is amortized
over 25 years and the term of the mortgage is five years. The
mortgage interest rate is 9% compounded semi-annually. Amir will
ANSWERS CONCORDIA UNIVERSITY
Question 1
What would be your required monthly payments on a five year loan
for a $50,000 boat, requiring a down payment of $5,000, if
payments are due at the end of each month and the interest rate is
8% compounded annually?
a.$912
.44
b.$925
.03
c.$906
.44
d.$912
.27
Answer: c
*Question 2
Jan plans to invest $2000 in an equity fund every year end beginning
this year. The expected annual return on the fund is 15 percent.
How much would she expect to have at the end of 20 years?
a. $176424
b. $204887
c. $178424
d. $237620
Answer: b
Question 3
,In 30 years, you plan to set up a fellowship fund for your university
that pays out $100,000/year in perpetuity with an annually
compounded discount rate of 5%. In order to set up the fund in 30
years, how much do you need to save each year (starting this year)
assuming you can get a semi-annually compounded return of 10% on
your savings for the next 30 years?
a. $66,666.67
b. $11,595.56
c. $21,215.49
d. $30,744.90
e. $30,000.00
Answer: b
, Question 4
The R&M Bank currently offers an investment account with an
interest rate of 8% compounded semi- annually. R&M wants to offer
customers another account with interest compounded monthly. If
R&M wants the effective rates to be equal, what interest rate should
R&M quote for the second account?
a. 7.87%
b. 8.00%
c. 8.16%
d. 24.00%
Answer
:a
Questi
on 5
The R&M Bank currently offers an investment account with an
interest rate of 6% compounded monthly. R&M wants to offer
customers another account with interest compounded quarterly. If
R&M wants the effective rates to be equal, what interest rate should
R&M quote for the second account?
a. 2.00%
b. 6.00%
c. 6.03%
d. 6.17%
Answer
:c
Questi
on 6
Amir has obtained a $250,000 mortgage. The mortgage is amortized
over 25 years and the term of the mortgage is five years. The
mortgage interest rate is 9% compounded semi-annually. Amir will
