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104) How much would you need to invest today as a lump sum at 10.5 percent, compounded
continuously, to have $200,000 in five years?
A) $108,206.67
B) $118,311.07
C) $124,318.08
D) $114,407.17
E) $131,008.15
105) Mr. Rich arranged for a mortgage loan for 65 percent of the $2.5 million purchase price of a
home. The monthly payment will be $10,400 and the mortgage term is 30 years. What is the
EAR on this loan?
A) 6.82 percent
B) 6.25 percent
C) 6.46 percent
D) 6.91 percent
E) 6.62 percent
106) A credit card company quotes you an APR of 18.9 percent. What is the actual rate of
interest you are paying if interest is computed monthly?
A) 18.90 percent
B) 19.21 percent
C) 20.63 percent
D) 19.57 percent
E) 20.72 percent
107) Your local pawn shop loans money at an annual rate of 24 percent and compounds interest
weekly. What is the actual rate being charged on these loans?
A) 25.16 percent
B) 27.05 percent
C) 26.49 percent
D) 27.56 percent
E) 28.64 percent
108) A new sports coupe costs $41,750 and the finance office has quoted you an APR of 7.7
compounded monthly, for 36 months. What is the EAR?
A) 7.81 percent
B) 8.02 percent
C) 7.94 percent
D) 8.13 percent
E) 7.98 percent
109) What is the EAR of 14.9 percent compounded continuously?
A) 15.59 percent
B) 15.62 percent
C) 15.69 percent
D) 15.84 percent
E) 16.07 percent
110) What is the EAR of 18.9 percent compounded continuously?
A) 19.06 percent
B) 20.80 percent
C) 19.43 percent
D) 19.89 percent
E) 21.38 percent
111) First City Bank offers an APR of 7.65 percent on its loans. What is the maximum rate the
bank can actually earn based on the quoted rate?
A) 7.95 percent
B) 8.14 percent
C) 8.21 percent
D) 7.78 percent
E) 7.87 percent
112) Assume a 1-year loan for $6,000 has an interest rate of 4.5 percent, compounded annually.
How much additional interest would be charged if the rate had compounded continuously rather
than annually?
A) $5.84
B) $6.17
C) $6.10
D) $5.93
E) $6.28
113) The Friendly Bank wants to earn an EAR of 12 percent on its consumer loans. The bank
uses daily compounding. What rate is the bank most apt to quote on these loans?
A) 11.76 percent
B) 11.38 percent
C) 11.33 percent
D) 12.12 percent
E) 12.00 percent
114) You borrow money today at 6.65 percent, compounded annually, and repay the principal
and interest in one lump sum of $12,800 two years from today. How much are you borrowing?
A) $9,900.00
B) $10,211.16
C) $11,253.52
D) $11,401.16
E) $11,250.00
115) This morning, you borrowed $12,700 at an APR of 6.9 percent. If you repay the loan in one
lump sum three years from today, how much will you have to repay?
A) $15,514.47
B) $15,808.13
C) $15,313.00
D) $15,324.60
E) $16,441.20
116) On this date last year, you borrowed $3,900. You have to repay the loan with a lump sum
payment of $6,000 six years from now. What is the interest rate?
A) 6.01 percent
B) 6.35 percent
C) 6.78 percent
D) 5.47 percent
E) 5.38 percent
117) John's Auto Repair just obtained an interest-only loan of $35,000 with annual payments for
10 years and an interest rate of 8 percent. What is the amount of the loan payment in Year 8?
A) $5,216.03
B) $4,918.07
C) $4,280.00
D) $5,211.06
E) $2,800.00
118) Kris borrowed $25,000 with an interest-only, 4-year loan at 4.75 percent. What is the
amount of the loan payment in Year 4 if payments are made annually?
A) $26,187.50
B) $25,296.88
C) $7,009.40
D) $1,187.50
E) $296.88
119) Assume you borrow $30,000 at an interest rate of 5.35 percent. The terms stipulate that the
principal is due in full in 5 years and interest is to be paid annually at the end of each year. How
much total interest will you pay on this loan assuming you pay as agreed?
A) $4,982
B) $7,400
C) $8,025
D) $8,500
E) $1,605
120) You just acquired a home mortgage for 30 years in the amount of $184,500 at 4.65 percent
interest, compounded monthly. How much of the first payment will be interest if the loan is
repaid in equal monthly payments?
A) $725.20
B) $706.16
C) $714.94
D) $736.36
E) $710.46
121) Al obtained a mortgage of $195,000 at 5.25 percent for 15 years. How much of the second
monthly payment is applied to interest?
A) $850.00
B) $852.09
C) $849.16
D) $853.13
E) $848.08
122) This morning, you borrowed $162,000 to buy a house. The mortgage rate is 4.35 percent.
The loan is to be repaid in equal monthly payments over 20 years with the first payment due one
month from today. Assume each month is equal to 1/12 of a year and all taxes and insurance
premiums are paid separately. How much of the second payment applies to the principal
balance?
A) $568.84
B) $426.11
C) $424.57
D) $587.25
E) $585.71
123) You are seeking a fixed-rate mortgage of $195,000 with a term of 30 years. Your bank
quotes an APR of 6.2 percent, compounded monthly. You can only afford monthly payments of
$1,000, so you offer to pay off any remaining loan balance at the end of the loan term in the form
of a single balloon payment. What will be the amount of the balloon payment?
A) $232,191.91
B) $173,316.67
C) $194,480.18
D) $202,828.59
E) $226,315.07
124) Al's obtained a discount loan of $68,500 today that requires a repayment of $88,000, 3
years from today. What is the APR?
A) 7.87 percent
B) 8.01 percent
C) 8.71 percent
D) 8.57 percent
E) 8.90 percent
125) A 1-year loan of $15,000 is quoted at 6.7 percent plus 3 points. This loan is to be repaid in
one lump sum. What is the actual cost of this loan?
A) 11.86 percent
B) 6.91 percent
C) 12.55 percent
D) 10.00 percent
E) 9.70 percent
