GCMII: Final Examination

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

PART I: PERSONAL FINANCE: Credit Cards 35 total points
 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 1^{st} – September 30^{th} 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 9^{th}  
a. Find the average daily balance for the billing period. Round to the nearest cent.  $


b. Find the interest to be paid on October 1^{st}, the next billing date. Round to the nearest cent.  $


c. Find the balance due on October 1^{st}.

$


d. What is the minimum monthly payment due by October 9^{th}?
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.
 The price of a home is $120,000. The bank requires a 15% down payment. The buyer is offered two mortgage options:
 Option A: 30year fixed at 7% with closing costs of $2,000 and one point
 Option B: 30year 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
30year fixed at 7% with closing costs of $2,000 + 1 point 
OPTION B
30year 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:

 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: $______________________________
 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
 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 
 Make a scatter plot for the given data.
 State the correlation between the two variables: ¨ Pos ¨ Neg ¨ No Correlation
 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: _________________
 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: _________________
 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: _________________________