Show-all-your-work-to-get-full-credit

(Show all your work to get full credit. This quiz covers materials from week 1. Ch 9)

1. (20 pts) Suppose that you have $6000 to invest. Which investment yields the greater over 4 years: 8.25% compounded quarterly or 8.3% compounded semiannually?

2. (20 pts) A passbook saving account has a rate of 6%. Find the effective annual yield, rounded to the nearest tenth of a percent, if the interest is compounded

a. quarterly

b. 1000 times per year.

3. (20 pts) At age 25, to save for retirement, you decide to deposit $200 at the end of each month into an Individual Retirement Account (IRA) that pays 7.5% compounded monthly.

a. How much will you have from the IRA when you retire at age 65?

b. Find the interest

4. (40 pts) The price of a home is $195,000. The bank requires a 10% down payment. The cost of the home is financed with a 30-year fixed rate mortgage at 7.5%.

a. Find the required down payment.

b. Find the amount of the mortgage.

c. Find the monthly payment (excluding escrowed taxes and insurance).

d. Find the total interest paid over 30 years.