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?

 

                                                                                                Answer:               $______________________________

 

 

  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?

 

 

Answer                                $______________________________

 

 

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.

 

Answer:   _________________

 

 

  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?

 

 

Answer:    __________________

 

 

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?

 

Answer:  _________________________

 

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?

 

 

Answer:  _________________________

 

 

 

 

 

 

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