ITEC 3800 - Midterm Exam Questions
& Answers5
$312,612 - ANSWERS-If you borrowed $131,000 from a bank for a period of 25 years and paid
compound interest at the rate of 5% per year, what will the total interest that you will end up
paying?
$312,612
$174,570
$367,873
$245,473
4.00% - ANSWERS-What rate of interest will you have to get per year if you would like to buy a
car for $49,000 at the end of 9 years, if you start a money-market account with $2,500 and are
ready to deposit $350 at the end of each month?
3.45%
4.00%
5.43%
6.31%
44 - ANSWERS-If you borrow $60,000 from your dad for college and you agree to pay him back
at 10% interest per year in monthly installments of $1,650 each month-end after you find a job,
how many months will it take you to pay off the loan. Round the answer in months to the next
higher digit.
44
50
55
57
, $5,130 - ANSWERS-Marla would like to collect $120,000 to buy a house in 12 years. She thinks
she can save money in a money-market account earning 6% interest per year. She would like to
deposit an amount Q today to open the account, make a deposit every year, and make the last
deposit at the end of Year 12 into the account. She also believes that she can increase the value
of the deposit that she makes into the account every year by 4% above what she deposited the
previous year, starting with the amount Q. What is the value of Q with which she will have to
open the account to make this happen?
$5,130
$6,677
$9,350
$9,293
$323,069 - ANSWERS-Mr. Nina borrows $425,000 from the bank at 3.5% per year interest over a
30-year period. He can make a monthly month-end payment of $1,400 and would like to make a
balloon payment at the end of the 30-year period. What would be the size of the balloon
payment?
$218,058
$323,069
$433,197
$548,512
& Answers5
$312,612 - ANSWERS-If you borrowed $131,000 from a bank for a period of 25 years and paid
compound interest at the rate of 5% per year, what will the total interest that you will end up
paying?
$312,612
$174,570
$367,873
$245,473
4.00% - ANSWERS-What rate of interest will you have to get per year if you would like to buy a
car for $49,000 at the end of 9 years, if you start a money-market account with $2,500 and are
ready to deposit $350 at the end of each month?
3.45%
4.00%
5.43%
6.31%
44 - ANSWERS-If you borrow $60,000 from your dad for college and you agree to pay him back
at 10% interest per year in monthly installments of $1,650 each month-end after you find a job,
how many months will it take you to pay off the loan. Round the answer in months to the next
higher digit.
44
50
55
57
, $5,130 - ANSWERS-Marla would like to collect $120,000 to buy a house in 12 years. She thinks
she can save money in a money-market account earning 6% interest per year. She would like to
deposit an amount Q today to open the account, make a deposit every year, and make the last
deposit at the end of Year 12 into the account. She also believes that she can increase the value
of the deposit that she makes into the account every year by 4% above what she deposited the
previous year, starting with the amount Q. What is the value of Q with which she will have to
open the account to make this happen?
$5,130
$6,677
$9,350
$9,293
$323,069 - ANSWERS-Mr. Nina borrows $425,000 from the bank at 3.5% per year interest over a
30-year period. He can make a monthly month-end payment of $1,400 and would like to make a
balloon payment at the end of the 30-year period. What would be the size of the balloon
payment?
$218,058
$323,069
$433,197
$548,512
