· 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 Sunday October 13, 2019.
· 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 $400,000. They decide to make a 20% down payment on a 30-year mortgage at 3.75%.
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 $ 1800.00. The store has 2 options for purchasing:
I. financing at 6% simple interest per year for 2 years with a 10% down payment.
II. no down payment and financing at 5.2% 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?
b. Which option should they choose if they want the smallest total installment price?
c. Which option should they choose if they want the smallest amount of the monthly payment?
3. Maria’s parents tell them that they will set up a savings account for their first grandchild. They have $10,000 to invest and have identified an account that pays 3% compounded weekly. Since Maria and John both just finished a course on consumer mathematics, they each decide to calculate how much interest will have been earned at the end of 10 years and the end of 18 years.
Maria is very precise and never rounds her decimal places until the end of her calculations.
John always rounds each intermediate step to 5 decimal places.
Answer each of the following questions separately, showing all your work to reach each answer.
a. How much interest will Maria calculate for each time period (10 years and 18 years)?
b. How much interest will John calculate for each time period? (10 years and 18 years)?
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.
a. Maria has found an annuity that pays 2% compounded monthly. If they made a deposit of $200 each month, what would be the total value of this annuity at the end of 30 years if interest rate remains the same?
b. John has found an annuity that pays 2.5% compounded semi-annually. If they made a deposit of $1000 every six months, what would be the total value of this annuity at the end of 30 years if interest rate remains the same?
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 7 Siamese cats, 9 common cats, 4 German Shepherds, 2 Labrador Retrievers, and 6 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.
a. What is the probability that they select a cat?
b. What are the odds that they select a cat?
c. What is the probability that they select either a common cat or a mixed-breed dog?
d. What is the probability that they select a dog that it is not a Labrador Retriever?
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