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65. What will be the monthly payment on a home mortgage of $75,000 at 12% interest, to be
amortized over 30 years?
66. Your real estate agent mentions that homes in your price range require a payment of
$1,200 per month for 30 years at 9% interest. What is the size of the mortgage with these terms?
67. Assume you are making $989 monthly payments on your amortized mortgage. The
amount of each payment that is applied to the principal balance:
68. How much must be saved at the end of each year for the next 10 years in order to
accumulate $50,000, if you can earn 9% annually? Assume you contribute the same amount to
your savings every year.
69. Your retirement account has a current balance of $50,000. What interest rate would need
to be earned in order to accumulate a total of $1,000,000 in 30 years, by adding $6,000 annually?
70. Approximately how much should be accumulated by the beginning of retirement to
provide a $2,500 monthly check that will last for 25 years, during which time the fund will earn 6%
interest with monthly compounding?
71. The present value of an annuity stream of $100 per year is $614 when valued at a 10%
rate. By approximately how much would the value change if these were annuities due?
72. Approximately how much must be saved for retirement in order to withdraw $100,000 per
year for the next 25 years if the balance earns 8% annually, and the first payment occurs one year
from now?
73. With $1.5 million in an account expected to earn 8% annually over the retiree's 30 years
of life expectancy, what annual annuity can be withdrawn, beginning today?
74. How much can be accumulated for retirement if $2,000 is deposited annually, beginning 1
year from today, and the account earns 9% interest compounded annually for 40 years?
75. If inflation in Wonderland averaged about 3% per month in 2013, what was the annual
rate of inflation?
76. Assume your uncle recorded his salary history during a 40-year career and found that it
had increased 10-fold. If inflation averaged 4% annually during the period, then over his career
his purchasing power:
77. Real interest rates:
78. On the day you retire you have $1,000,000 saved. You expect to live another 25 years
during which time you expect to earn 6.19% on your savings while inflation averages 2.5%
annually. Assume you want to spend the same amount each year in real terms and die on the day
you spend your last dime. What real amount will you be able to spend each year?
79. What is the expected real rate of interest for an account that offers a 12% nominal rate of
return when the rate of inflation is 6% annually?
80. What happens over time to the real cost of purchasing a home if the mortgage payments
are fixed in nominal terms and inflation is in existence?
81. What is the minimum nominal rate of return that you should accept if you require a 4%
real rate of return and the rate of inflation is expected to average 3.5% during the investment
period?
82. What APR is being earned on a deposit of $5,000 made 10 years ago today if the deposit
is worth $9,848.21 today? The deposit pays interest semiannually.
83. An interest rate that has been annualized using compound interest is termed the:
84. How much interest can be accumulated during one year on a $1,000 deposit paying
continuously compounded interest at an APR of 10%?
85. What is the relationship between an annually compounded rate and the annual
percentage rate (APR) which is calculated for truth-in-lending laws for a loan requiring monthly
payments?
86. What is the APR on a loan that charges interest at the rate of 1.4% per month?
87. If interest is paid
m
times per year, then the per-period interest rate equals the:
88. If the effective annual rate of interest is known to be 16.08% on a debt that has quarterly
payments, what is the annual percentage rate?
89. Would a depositor prefer an APR of 8% with monthly compounding or an APR of 8.5%
with semiannual compounding?
