Practice Exercises For Test 1 (Sections 8.1, 8.2, 8.4, 8.5)
1. What is 20% of 360? (Give answer as integer or decimal.)
2. 40 is what percent of 160? (Give answer as integer or decimal.)
3. 44.55 is 24.75% of what number? (Give answer as integer or decimal.)
4. A husband bought a diamond ring for his famous wife for $35,000. Years later, the
ring sold at auction for $12,008,400. The auction price was what percent of the
original price? (Round answer to nearest integer as needed.)
5. The 2005 sales
(in thousands of dollars) of the
top 5 products of a company are
summarized in this table.
a. What percent of the sales of
these 5 products was due to
product B? (Round answer to
nearest hundredth as needed.)
b. What percent greater were sales
of B than product E?
(Round answer to nearest
hundredth as needed.)
6. A record company reported that in 2009, downloaded music album sales were
524% of what they were in 2005. If there were 10.9 million albums downloaded in
2005, how many were downloaded in 2009? (Round to 1 decimal place as needed.)
7. A person earns $25,900 one year and gets a 5% raise in salary. What is the new
salary?
8. Use the table below to calculate the federal income tax due for a taxable income of
$320,000. (Give answer as an integer or decimal.)
9. Find the simple interest if: Principal is $500, Rate of Interest is 11%, Time is 2 years.
10. If the simple interest on $3000 for 9 years is $1620, then what is the rate?
11. Use the future value formula for simple interest to find P if A = $2448, r = 6%,
t = 6. (Simplify your answer.)
12. Use the simple interest formula to find t if I = $972,
P = $8100 and r = 3%. (Give answer as an integer or decimal.)
13. What is the value of an account at the end of 6 years if a principal of $13,000 is
deposited in an account at an annual interest rate of 4% compounded monthly?
(Round to the nearest cent as needed.)
14. A student has a government-backed loan for which payments are not due and
interest does not accumulate until the student stops attending college. If the student
borrowed $10,000 at an annual interest rate of 7.5%, how much interest is due 4
months after the student must begin payments? (Round to the nearest cent as needed.)
15. Pete started a trust fund for his children. If the fund pays 4.8% compounded
annually and the account has $30000 in it after 19 years, how much was the lump sum
payment that Pete deposited originally. (Round answer UP to the nearest cent.)
16. A family is planning a vacation in 2 years. They want to get a certificate of deposit
for $1500 that can be cashed in for the trip. What is the minimum annual simple interest
rate needed to have $2100 for the vacation? (Round to two decimal places as needed.)
17. Compute the monthly payment for a simple interest loan of $2660, with an annual
interest rate of 8% and a term of 5 years. (Round to the nearest cent.)
18. A man took out a 20 year loan at an annual rate of 6% to put an addition on his
house. His banker allowed him to add other expenses into the loan if he wished so he
increased the loan to purchase furniture, a new car and a computer. If the computer
cost $1100 and the loan is a simple interest loan:
a. Total interest is ___
b. Total cost of computer is ___
(Simplify your answer.)
(Simplify your answer.)
19. Use the formula for the future value of an ordinary annuity to find A with the monthly
payment R = $550, the annual interest rate r = 9.0% and the number of monthly payments
n = 108. (Don’t round until the final answer. Then round to the nearest cent as needed.)
20. Find the value of the ordinary annuity at the end of the indicated time period. The
frequency of deposits is the same as the frequency of compounding.
Amount: $1000 5.5% quarterly 8 years (Round to the nearest cent as needed.)
21. Kal wants to save $15,000 in 6 years by making monthly payments into an ordinary
annuity for a down payment on a condo at the beach. If the annuity pay 0.6% monthly
interest, what will his monthly payment be? (Round up to the nearest cent.)
]
22. Alicia is saving for a new car. If she puts $50 at the end of each month in an
account paying an annual rate of 5.5%, how much will she have in 30 months? Assume
that compounding is monthly and round the final answer to the nearest cent as
needed. Don’t round intermediate values.
]
23. Find the monthly payment R needed to have a sinking fund accumulate the future
value A if A = $2000, r = 4% and n = 48. Interest is compounded monthly. Use the formula
for finding the future value of an ordinary annuity. (Round to the nearest cent as needed.)
]
24. Given a loan amount P, an annual interest rate r, and the length of the loan in
years, find the monthly payment R necessary to pay off the loan by completing parts
a – c. Represent the number of monthly payments by n.
Amount = $40,000, rate = 4%, time = 25 years
(
a. Calculate
b. Calculate
c. Let
(
) and call this number A. (Round to two decimal places as needed.)
)
and call this number B. (Round to two decimal places as needed.)
. (Round up to the nearest cent.)
25. Find the monthly payment R necessary to pay off a loan of $90,000 at 5%
compounded monthly for 30 years. (Round final answer up to the nearest cent.)
26. A borrower has taken out a 10 year mortgage for $92,000 at an annual rate of 5%.
Use the table to find the monthly payment. (Give answer as an integer or decimal.)
Table: Monthly payment on a $1000 loan
Annual
Number of years for the loan
Rate
3
4
10
20
4%
$29.53
$22.58
$10.12
$6.06
5%
$29.97
$23.04
$10.61
$6.60
6%
$30.42
$23.49
$11.10
$7.16
30
$4.77
$5.37
$6.00
27. Given the annual interest rate and a line of the amortization schedule, complete the
next line. Assume payments are monthly. (Round to the nearest cent as needed.)
Annual Interest
Rate
Payment
9.4%
$418.47
Interest
Paid
$51.96
Paid on
Principal
$366.51
Balance
$6269.83
28. Franklin’s used car cost $13000. After his down payment 0f $2000, he financed
the remainder at 6% for 4 years. If the monthly payment on this loan is $258.39, how
much interest will Franklin pay over the term of the loan? (Round answer to nearest
cent.)
29. If Alex can afford car payments of $280 per month for 4 years, what is the price of
a car that he can afford now if the interest rate is 8.7%. (Round to nearest dollar as
needed.)