Chapter 11 1 How much should be deposited semiannually into a sinking

Exam

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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Find the cost, including a sales charge of $1 per bond, for the transaction.

1)

Bond: WSN

Last Price: 101.500

Number Purchased: 27

1)

A)

$26,973.00

B)

$27,432.00

C)

$10,150.00

D)

$27,405.00

Solve the application problem. Round to the nearest cent.

1

2)

Find the amount of each payment into a sinking fund if $5000 must be accumulated. Payments are

made at the end of each quarter for 3 years, with interest of 6% compounded quarterly.

2)

A)

$296.40

B)

$421.45

C)

$383.40

D)

$1641.90

Use the given bond table to find the requested value for Solar Energy (SNG) bonds maturing in 2022.

COMPANY (TICKER) COUPON MATURITY

LAST

PRICE

LAST

YIELD

EST $ VOL

(000′s)

Solar Energy (SNG) 4.800 Dec 15, 2018 104.894 3.438 30,590

Solar Energy (SNG) 5.750 Jun 15, 2022 106.626 4.550 30,045

Solar Power (SPR) 4.625 Dec 15, 2022 101.951 5.050 30,985

3)

Price per bond

3)

A)

$1066.26

B)

$106.63

C)

$1019.51

D)

$1048.94

Find the requested value using the given stock table.

52 –Wk Tick Vol. Week’s Div YTD

High Low Name Sym. 100s Yld. P/E Last Chg. Amt % CHG

38.42 12.54 CommercialAir CMA 17718 3.1 21 31.68 +1.28 2.04 67.1

9.77 1.06 CommSource CSC 5263 .8 12 4.81 +0.23 .68 148.2

33.57 15.38 CompuStrateg CPS 6581 1.6 35 17.49 –0.05 .44 4.4

83.23 39.76 ComputerSolns CSL 23006 .7 24 80.11 +1.42 1.31 35.7

4)

High for the year for CompuStrateg (CPS)

4)

A)

$33.57

B)

$17.49

C)

$9.77

D)

$15.38

Find the present value of the annuity. Round to the nearest cent.

5)

Payments of $3700 made annually for 25 years at 8% compounded annually

5)

A)

$39,496.69

B)

$36,306.62

C)

$36,737.30

D)

$38,956.41

3

Find the amount of the annuity due rounded to the nearest cent.

6)

Amount of Each Deposit Deposited Rate Time (Years)

$1500 annually 6% 5

6)

A)

$6955.64

B)

$8962.98

C)

$31,955.64

D)

$5061.92

Solve the application problem. Round to the nearest cent.

7)

How much should be deposited semiannually into a sinking fund over 5 years to accumulate $

227,000 if the money earns 8% compounded semiannually?

7)

A)

$19,801.21

B)

$38,694.42

C)

$18,906.83

D)

$13,626.81

Solve the problem.

8)

A 48–year–old man deposits a total of $2000 per year in an IRA until age 65. How much money will

be in the account if the interest rate is 8% compounded semiannually with payments of $1000 made

at the end of each semiannual period?

8)

A)

$66,209.53

B)

$139,715.82

C)

$132,419.05

D)

$69,857.91

Find the amount of each payment needed to accumulate the indicated amount in a sinking fund. Round to the nearest

cent.

9)

$5500, money earns 12% compounded monthly, 3 years

9)

A)

$1815.11

B)

$127.66

C)

$1629.93

D)

$11.33

Find the amount of the annuity due rounded to the nearest cent.

10)

Amount of Each Deposit Deposited Rate Time (Years)

$2500 semiannually 6% 13

10)

A)

$99,274.08

B)

$88,648.16

C)

$50,037.66

D)

$93,882.61

Solve the application problem. Round to the nearest cent.

11)

Find the least amount that could be deposited in a bank account today at 5% compounded

semiannually to allow $1875 withdrawals at the end of each 6 months for 10 years.

11)

A)

$120,770.33

B)

$29,229.68

C)

$30,346.03

D)

$28,085.42

12)

Find the least amount that could be deposited in a bank account today at 5% compounded

quarterly to allow $650 withdrawals at the end of each quarter for 4 years.

12)

A)

$9899.45

B)

$94,626.81

C)

$9373.19

D)

$8840.36

Use the given bond table to find the requested value for Solar Energy (SNG) bonds maturing in 2022.

COMPANY (TICKER) COUPON MATURITY

LAST

PRICE

LAST

YIELD

EST $ VOL

(000′s)

Solar Energy (SNG) 4.800 Dec 15, 2018 104.894 3.438 30,590

Solar Energy (SNG) 5.750 Jun 15, 2022 106.626 4.550 30,045

Solar Power (SPR) 4.625 Dec 15, 2022 101.951 5.050 30,985

13)

Volume of bonds sold

13)

A)

3,004,500

B)

30,045,000

C)

30,590,000

D)

30,045

Find the amount of each payment needed to accumulate the indicated amount in a sinking fund. Round to the nearest

cent.

14)

$8100, money earns 8% compounded quarterly, 5 years

14)

A)

$333.40

B)

$1380.73

C)

$674.65

D)

$1495.50

Find the amount of the ordinary annuity rounded to the nearest cent.

15)

Amount of Each Deposit Deposited Rate Time (Years)

$1100 annually 6% 14

15)

A)

$20,770.35

B)

$23,116.58

C)

$39,103.68

D)

$41,449.91

Find the PE ratio. Round to the nearest whole number.

16)

Stock: BG + E

Current Price per Share: $30

Annual Net Earnings per Share: $0.26

16)

A)

200

B)

100

C)

115

D)

1

12

Solve the application problem. Round to the nearest cent.

17)

How much should be deposited monthly into a sinking fund over 4 years to accumulate $127,000 if

the money earns 12% compounded monthly?

17)

A)

$2073.91

B)

$1584.96

C)

$2499.36

D)

$3169.92

Solve the problem.

18)

Tom O’Donnell bought 10 Public Communications (PBC) bonds maturing in 2025. According to the

bond table, the last price is listed as 84.875. If the sales commission is $1 per bond, what is the total

purchase price?

18)

A)

$8477.50

B)

$8487.50

C)

$8497.50

D)

$9151.25

Find the PE ratio. Round to the nearest whole number.

19)

Stock: Hechinger

Current Price per Share: $15.68

Annual Net Earnings per Share: $1.13

19)

A)

16

B)

12

C)

15

D)

14

Find the requested value using the given stock table.

52 –Wk Tick Vol. Week’s Div YTD

High Low Name Sym. 100s Yld. P/E Last Chg. Amt % CHG

38.42 12.54 CommercialAir CMA 17718 3.1 21 31.68 +1.28 2.04 67.1

9.77 1.06 CommSource CSC 5263 .8 12 4.81 +0.23 .68 148.2

33.57 15.38 CompuStrateg CPS 6581 1.6 35 17.49 –0.05 .44 4.4

83.23 39.76 ComputerSolns CSL 23006 .7 24 80.11 +1.42 1.31 35.7

20)

PE ratio for CommSource (CSC)

20)

A)

21

B)

24

C)

12

D)

35

21)

Change from the previous day for CommSource (CSC)

21)

A)

$0.23

B)

$148.20

C)

$4.81

D)

–$0.05

Find the amount of the ordinary annuity rounded to the nearest cent.

22)

Amount of Each Deposit Deposited Rate Time (Years)

$7200 quarterly 8% 8

22)

A)

$305,131.97

B)

$76,583.72

C)

$318,434.62

D)

$678,434.61

Find the requested value using the given stock table.

52 –Wk Tick Vol. Week’s Div YTD

High Low Name Sym. 100s Yld. P/E Last Chg. Amt % CHG

38.42 12.54 CommercialAir CMA 17718 3.1 21 31.68 +1.28 2.04 67.1

9.77 1.06 CommSource CSC 5263 .8 12 4.81 +0.23 .68 148.2

33.57 15.38 CompuStrateg CPS 6581 1.6 35 17.49 –0.05 .44 4.4

83.23 39.76 ComputerSolns CSL 23006 .7 24 80.11 +1.42 1.31 35.7

23)

Sales volume for the day for CommercialAir (CMA)

23)

A)

177,180

B)

177.18

C)

17,718

D)

1,771,800

Find the PE ratio. Round to the nearest whole number.

24)

Stock: Crown

Current Price per Share: $32.59

Annual Net Earnings per Share: $9.06

24)

A)

5

B)

1

C)

40

D)

4

Solve the application problem. Round to the nearest cent.

25)

Charles wants to retire in 17 years. At that time he wants to be able to withdraw $22,000 at the end

of each year for 16 years. Assume that money can be deposited at 8% per year compounded

annually. What exact amount will Charles need in 17 years?

25)

A)

$200,676.08

B)

$355,269.86

C)

$188,308.56

D)

$194,730.14

Use the given bond table to find the requested value for Solar Energy (SNG) bonds maturing in 2022.

COMPANY (TICKER) COUPON MATURITY

LAST

PRICE

LAST

YIELD

EST $ VOL

(000′s)

Solar Energy (SNG) 4.800 Dec 15, 2018 104.894 3.438 30,590

Solar Energy (SNG) 5.750 Jun 15, 2022 106.626 4.550 30,045

Solar Power (SPR) 4.625 Dec 15, 2022 101.951 5.050 30,985

26)

Price to buy 50 of these bonds including a sales charge of $1 per bond

26)

A)

$53,313

B)

$53,363

C)

$53,323

D)

$53,813

27)

Annual interest paid

27)

A)

$575.00

B)

$48.00

C)

$57.50

D)

$5.75

Find the amount of each payment needed to accumulate the indicated amount in a sinking fund. Round to the nearest

cent.

28)

$5700, money earns 5% compounded annually, 8 years

28)

A)

$700.07

B)

$618.62

C)

$596.90

D)

$575.93

Find the cost, including a sales charge of $1 per bond, for the transaction.

29)

Bond: BLT

Last Price: 97.375

Number Purchased: 74

29)

A)

$72,057.50

B)

$72,131.50

C)

$73,926.00

D)

$97,375.00

Find the PE ratio. Round to the nearest whole number.

30)

Stock: Waverly

Current Price per Share: $31.50

Annual Net Earnings per Share: $0.37

30)

A)

22

B)

85

C)

89

D)

70

Find the requested value using the given stock table.

52 –Wk Tick Vol. Week’s Div YTD

High Low Name Sym. 100s Yld. P/E Last Chg. Amt % CHG

38.42 12.54 CommercialAir CMA 17718 3.1 21 31.68 +1.28 2.04 67.1

9.77 1.06 CommSource CSC 5263 .8 12 4.81 +0.23 .68 148.2

33.57 15.38 CompuStrateg CPS 6581 1.6 35 17.49 –0.05 .44 4.4

83.23 39.76 ComputerSolns CSL 23006 .7 24 80.11 +1.42 1.31 35.7

31)

Dividend yield for ComputerSolns (CSL)

31)

A)

35.7%

B)

0.7%

C)

1.31%

D)

70%

Solve the problem.

32)

The manager of a retirement account purchased 104 Solar Energy (SNG) bonds that mature in 2020

for the retirement account. According to a bond table, the last price is 96.375 and the coupon rate is

7.750. Assuming a sales commission of $1 per bond, find the total purchase price of the bonds, and

the annual interest payment.

32)

A)

$103,036.25, $5400.20

B)

$100,334.00, $8060.00

C)

$100,230.00, $7750.00

D)

$100,126.00, $7979.40