- This exam is worth 15 points toward your final grade in the course.
- You may take as long as you like on this exam, but you must complete and submit to your LEO classroom assignment folder by 11:59 pm on the Sunday of the last day of class.
- The online text will be a valuable resource as you work on these problems.
- Please submit your work in the LEO assignment folder in one of these ways:
- typed using an equation editor into a new blank document and saved as a single file
- neatly handwritten, scanned, and saved as a single file. Be sure that the pages are right-side-up and in order.
*** Please note that ONE single file is required. ***
- You MUST show all of your work to receive full credit. If you have questions about showing work, please ask.
- The Final Exam is open book and open notes. You may refer to your textbook, notes, and online classroom materials, but you may not consult with anyone in person or online. You may not use any online service to solve any of the problems.
The following statement must be signed and dated:
I have completed this Final Exam myself, working independently and not consulting with anyone except the instructor nor with any online source except ALEKS. I have neither given nor received help on this problem set.
Name: Date
Maria and John have been married for 2 years and just learned that they are pregnant.
1. They have been renting a small apartment but decide to purchase a house.
They find one that is selling for $375,000. They decide to make a 20% down payment on a 3.4% interest 30-year mortgage.
Answer each of the following questions separately, showing all your work to reach each answer.
a. How much will they need for the down payment?
b. What will be the mortgage amount (ie the principal)
c. How much will their monthly payment be for the principal and interest?
d. How much total interest will they pay if they take the full 30 years to pay off the mortgage?
2. They decide to shop for the new house. They choose items that amount to $1,600.00. The store has 2 options for purchasing:
I. financing at 6.4% simple interest per year for 2 years with a 20% down payment.
II. no down payment and financing at 6.5% simple interest for 3 years.
Answer each of the following questions separately, showing all your work to reach each answer.
a. Which option should they choose if they want the smallest finance charge? Show all steps to support your answer.
b. Which option should they choose if they want the smallest total installment price? Show all steps to support your answer
c. Which option should they choose if they want the smallest amount of the monthly payment? Show all steps to support your answer
d. If they decide to defer any purchases and take a $1,600 bonus that Maria will be getting from work and invest it at 2.5% per year simple interest, how long will it need to be invested to earn $250 interest?
3. Maria’s parents tell them that they will set up a savings account for their first grandchild. They have $15,000 to invest and have identified an account that pays 2.6% compounded monthly. Since Maria and John both just finished a course on consumer mathematics, they each decide to calculate how much the account will have in it and the interest earned at the end of 18 years.
Maria never rounds her intermediate calculations. She carries out each calculation to as many decimal places as her calculator will indicate. Her calculator displays eight decimal places. She only rounds to the nearest dollar and cents amount at the end of her calculations.
John always rounds each of his intermediate calculations to 4 decimal places.
Answer each of the following questions separately, showing all your work to reach each answer.
a. How much money will Maria calculate to
bein the accountat the end of18 years if she uses a calculator that gives answers out to 8
decimal places?
b. With Maria’s calculations, how much interest will be earned at the end of 18
years if she uses a calculator that gives answers out to 8 decimal places?
c. How much money will John calculate to be in the account at the end of 18 years if he rounds at each step to 4 decimal places.
d. With John’s calculations, how much interest will be earned at the end of 18 years if he rounds at each step to 4 decimal places.
4. Maria and John decide to save for retirement with an annuity.
Answer each of the following questions separately, showing all your work to reach each answer. Only round the final amount.
A. Maria has found an annuity that pays 2.2% compounded monthly. If they made a deposit of $200 each month,
a. what would be the total value of this annuity at the end of 30 years if interest rate remains the same?
b. how much interest will they have earned?
B. John has found an annuity that pays 2.5% compounded semi-annually. If they made a deposit of $1,200 every six months,
a. what would be the total value of this annuity at the end of 30 years if interest rate remains the same?
b. how much interest will they have earned?
5. Maria and John have decided that once they live in a home, they want to have a pet. Maria prefers cats and John prefers dogs. They go to an animal shelter and find several pets that they would love to take home. There are 8 Siamese cats, 12 common cats, 6 German Shepherds, 5 Labrador Retrievers, and 11 mixed-breed dogs. Since they can’t decide, they place all the adoption cards in a container and draw one.
Answer each of the following questions separately, showing all your work to reach each answer.
- What is the probability that they select a cat?
- What are the odds that they select a cat?
- What is the probability that they select either a common cat or a Labrador Retriever dog?
- What is the probability that if they select a dog, that it is not a mixed breed?
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