Alternate Quiz - Section 3-4 (Form A) - Present Value of an Annuity; Amortization

Multiple-choice exercise

Work out the problem on paper and then choose the letter for your answer. After you have successfully answered all questions, look at the top of the page to see how you did.

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You are going to borrow money to buy a boat. If you can get a 4-year loan at 5.3% compounded monthly and can afford monthly payments of $350, how much can you borrow? (Assume this problem involves an ordinary annuity.) Note: This problem is continued in problem #2.

$15108.72

$1384.68

$18667.89

None of the answers given; click to see the solution.

You are going to borrow money to buy a boat. If you can get a 4-year loan at 5.3% compounded monthly and can afford monthly payments of $350, how much interest will be paid on the loan? Note: This problem is a continuation of problem #1.

$1691.28

$14758.72

$3203.05

None of the answers given; click to see the solution.

A family is going to purchase a home costing $420,000. They must pay 15% down, and the rest is to be amortized over 30 years in equal monthly payments. If they obtain a loan at 5.1% compounded monthly, what will their monthly payment be? (Assume this problem involves an ordinary annuity.)

$1938.33

$2280.39

$12699.98

$421.08

None of the answers given; click to see the solution.

Suppose you have just won a lottery of $500,000. If the money is invested in an ordinary annuity that earns 4.8% compounded monthly, how many monthly payments of $5000 will you receive from the account?

128

84

-84

None of the answers given; click to see the solution.

An ordinary annuity contains $300,000. Withdrawals of $9443 are made quarterly for 10 years. At the end of that time, the annuity contains no money. What annual nominal compounding rate was used?

4.7%

67.6%

16.9%

4.9%

None of the answers given; click to see the solution.

If the monthly payment on a home mortgage of $250,000 made at 6% compounded monthly is $1754.14 for 20 years, how much interest is paid over the life of the loan?

$170,993.60

$300,000

$214,917.20

None of the answers given; click to see the solution.

A credit card balance of $1000 is being paid off with monthly payments of $80. The interest rate is 1.6% per month. What is the unpaid balance after the first monthly payment is made?

$936

$920

$921.28

None of the answers given; click to see the solution.