1. Suppose that in November 2007 you bought 10 shares of Google stock for $711.25 per share. Three years later you decide to sell the stock when it is trading at $597.45 per share.
What compound annual rate does your capital gain or loss represent?
2. To raise capital for building a new store in Central Pennsylvania, Trader Joe’s issues
10-year $1000 bond, with a 7% coupon rate. If interest on the bond is paid quarterly, calculate the total interest that will be paid over the life of the bond.
3. Suppose you deposit $150 each month into an account that earns 6.25%. After 10 years your account will have grown to $24,918.28. How much interest would you have earned?
4. Suppose Ansel, Gertrude and James are partners in a photography business and they agree to a 4:5:6 split of the profits. If they earned $4500 in profits last month, how much of the profit will Gertrude receive?
5. Suppose you want to buy a new car and you determine that you can afford to make monthly payments of $375. If you take out a 5-year loan at an interest rate of 6.15%, how much will you be able to borrow?
6. Gateway Security Systems, Inc posted $950,000 in profits last quarter, $640,000 of which will be distributed as a dividend, and there are 1,500,000 shares of stock. If you own 230 shares, how much of a dividend will you receive?
7. Suppose Jack took out a 15-year mortgage for $135,000 at an interest rate of 8.15%. His monthly payment is $1301.85. After 7 years, how much does Jack owe on his mortgage?
8. Suppose you invest $4000 in a Roth IRA, in an investment account which earns 9.25% over 30 years. What will be the after-tax value of your account (after 30 years)?
MATH 34 EXAM II PRACTICE EXAM A
9. Suppose a retailer sets its prices to include the 6.5% sales tax. If total sales for March are $46,769, how much sales tax will the retailer need to pay for its March sales?
10. Suppose you want to save up $250,000 over the next 8 years. If you can make monthly deposits into an investment account earning 7.5% interest, how much should you deposit each month? The annuity factor for monthly deposits at 7.5% interest for 8 years is
11. Suppose an architectural firm has 4 partners, Al, Becky, Carter, and Dave. They distribute the firm’s profits in an 10:12:9:5 split. If the firm has $120,345 in profits for last quarter and the entire profit will be distributed to the partners, how much profit will Becky receive? 12. A firm with $136,000,000 in profits for the last quarter declares a 15% dividend. The company has 2,000,000 shares of stock outstanding and the market price of the stock is currently $131.23 per share. Calculate the stock’s current dividend yield.
13. Suppose you bought stock in QED industries 6 years ago at $23.45 per share. Since you bought it, the stock has split 2 for 1 twice and is currently trading at $11.21 per share.
If you sold the stock at the current price, what compound annual does your capital gain represent? 14. Suppose you buy a corporate bond with a par value of $1,000 with a 9% coupon rate.
Interest is paid semi-annually. If you paid a $230 premium for the bond (that is, if you paid $1230 for the bond) what is the current yield on your investment?
15. Suppose you decide to invest your $1500 tax refund in mutual fund that has a net asset value of $31.25. If the mutual fund charges a 5% load, how many shares will you own with you $1500 investment?
16. Two years ago you invested $10,000 in a mutual fund and today that investment is worth $9567. But your rate of return for the year that just ended was 18%. Calculate the rate of return on your investment for the first year.
MATH 34 EXAM II PRACTICE EXAM A
17. The Benson Group Corp provides lifetime income to employees on retirement at age
65. The formula provides 1.75% for each year of service of the average of the employee’s earnings for the last 3 years of service, up to a maximum of 75%. If Jean is retiring this