## How much would the buyer have to deposit today into an account that earns 4% interest, compounded quarterly to have enough saved for the total closing costs in 5 years?

 GCMII:  Final Examination STUDENT NAME: ______________________________   DATE:    December 6, 2016 Attach all worksheets

PART I:                        PERSONAL FINANCE:  Credit Cards                                         35 total points

1. A credit card issuer calculates interest using the average daily balance method. The monthly interest rate is 2% of the average daily balance.  The following transactions occurred during the September 1st – September 30th billing period:

 Transaction Description Transaction Amount Previous balance: \$3,800 September 1 Billing date September 5    Payment \$800.00 credit September 9    Charge:  Gas \$  40.00 September 19  Charge:  Clothing \$160.00 September 27  Charge:  Airline ticket \$200.00 September 30 End of billing period Payment Due Date: October 9th a.     Find the average daily balance for the billing period. Round to the nearest cent. \$ b.    Find the interest to be paid on October 1st, the next billing date.  Round to the nearest cent. \$ c.     Find the balance due on October 1st. \$ d.    What is the minimum monthly payment due by October 9th? This credit card requires a \$10 minimum monthly payment if the balance due at the end of the billing period is less than \$360.  Otherwise, the minimum monthly payment is 1/36 of the balance due at the end of the billing period, rounded up to the nearest whole dollar. \$ e.     Given the rate of this credit card, how much of the minimum monthly payment will go towards interest given to the bank? \$ f.     Given the rate of this credit card, how much of the minimum monthly payment will go to towards reducing the balance? \$ g.    You decide to pay off the balance over four years.  If there are no further purchases charged to the card, how much must you pay each month? \$

PART II:                       PERSONAL FINANCE:  Mortgages                                            40 total points

Round all answers to the nearest dollar.

1. The price of a home is \$120,000. The bank requires a 15% down payment.  The buyer is                offered                two mortgage options:
• Option A: 30-year fixed at 7% with closing costs of \$2,000 and one point
• Option B: 30-year fixed at 6.5% with closing costs of \$1,500 and two points

Which mortgage loan has the greater total costs (closing costs + the amount paid for points + total cost of interest)? By how much?

Answer:               Option A [      ]                      Option B [     ]

Difference in total costs:   \$_______________________

 OPTION A 30-year fixed at 7% with closing costs of \$2,000 + 1 point OPTION B 30-year fixed at 6.5% with closing costs of \$1,500 + 2 points Down payment: Closing Costs: Points to be paid: Total Cash to Close: Loan Amount: Monthly Mortgage Amount: Total Amount Paid: Total Interest Paid: Total Cost of Each Option:

1. Using the financial industry’s rule of thumb for monthly mortgage limits set at 28% of gross monthly income – how much would the buyer have to earn yearly to be able to afford the option chosen in Part I?

1. How much would the buyer have to deposit today into an account that earns 4% interest, compounded quarterly to have enough saved for the total closing costs in 5 years?

PART III:          STATISTICS                                                                                          25 total points

1. Teenage Drug Use

 Country Czech Rep Denmark UK Finland Ireland Italy N. Ireland Norway Portugal Scotland US (x): % Marijuana 22 17 40 5 37 19 23 6 7 53 34 (y):  % Other Illegal Drugs 4 3 21 1 16 8 14 3 3 31 24

1. Make a scatter plot for the given data.

1. State the correlation between the two variables: ¨  Pos    ¨  Neg   ¨ No Correlation

1. Determine the correlation coefficient, rounded to two decimal places, between the percentage of people in a country who are literate and the percentage who are undernourished.

1. Find the equation of the regression line for the percentage of teenagers who have used marijuana and the percentage who have used other drugs. Round m and b to two decimal places.

y = mx + b                                                                          Answer:    _________________

1. What percentage of teenagers, to the nearest percent, can we anticipate using illegal drugs other than marijuana in a country where 10% of teenagers have used marijuana?

PART IV:          EXTRA CREDIT                                                                                    20 total points

EC1:     How much more would you earn in the first investment than in the second investment?  Please round answers to the nearest dollar.

\$50,000 invested for 30 years at 10% compounded annually       Amt. earned: \$______________

\$50,000 invested for 30 years at   5% compounded monthly       Amt. earned: \$______________

How much more will be earned in the first investment?                Difference:    \$______________

EC2      How much money should be deposited today in an account that earns 9.5% compounded monthly so that it will accumulate to \$10,000 in three years?

Amt. deposited: \$___________

EC3:     License plates in a particular state display 4 letters followed by 2 numbers.  How many different license plates can be manufactured for this state?

EC4:     A group consists of four men and five women.  Three people are selected to attend a conference. How many ways can three people be selected from this group of nine?