MAT 205

1. Use the formula for continuous compounding to compute the balance in the account after 1,5, and 20 years. Also, find the APY for the account.

A $17,000 deposit in an account with an APR of 3.5%

The balance in the account after 1 year

The balance in the account after 5 years

The balance in the account after 5 years

2. You pay $5600 for a municipal bond. When it matures after 15 years, you receive $11,000

The total return is ___%.

3. Consider the following loan. Complete parts (a)-(c) below.

An individual borrowed $77,000 at an APR of 7% which will be paid off with monthly payments of $562 for 23 years.

a. Identify the amount borrowed, the annual interest rate, the number of payments per year, the loan term, and the payment amount.

The amount borrowed is $77,000

The annual interest rate is 7%

The number of payments per year is 12

The number of payments per the loan term is 23 year

And the payment amount is $562

b. How many total payments does the loan require? What is the total amount paid over the full term of the loan?

There are ___ payments toward the loan and the total amount paid is _____

4. Compute the total and annual returns on the following investment

5. You pay $5600 for a municipal bond. When it matures after 15 years you receive $11,000

The total return is ___%

6. Someone needs to borrow $11000 to buy a car and the person has determined that monthly payments of $224 are affordable. The bank offers a 3-year loan at 7% APR, 4-year loan at 7.5%, or a 5-year loan at 8% APR.

a. The second loan best meets the person’s needs because the monthly payment of $___ is less than the maximum budgeted amount of $225 per month.

b. The third loan best meets the person’s needs because the monthly payment of $___ is less than the maximum budgeted amount of $225 per month.

c. The first loan best meets the person’s needs because the monthly payment of $___ is less than the maximum budgeted among to $225 per month.

d. None of the loans meet the person’s needs

7. Suppose you take out a 30 year $250,000 mortgage with an APR of 6%. You make payments for 3 years (36 months payments) and then consider refinancing the original loan. The new loan would have a term of 20 years, have an APR of 5.2%, and be in the amount of the unpaid balance on the original loan. (The amount you boron on the new loan would be used to pay off the balance on the original loan.). The administrative cost of taking out the second loan would be $2200. Use the information to complete part (A) What are the monthly payments on the original loan?

8. A woman earned wages of $33,900, received $1600 in interest from a savings account, and contributed $3400 to a tax-deferred retirement plan. She was entitled to a personal exemption of $2500 and had deductions totaling $5190. Find her gross income, adjusted gross income, and taxable income.

9. Her gross income was $___. (simplify your answer)

Her adjusted gross income was $____

Her taxable income was $___

10. A man earned $23,000 from wages. Let FICA tax rates be 7.65% on the first $127,200 of income from wages, and 1.45% on any income from wages in excess of $127,200. His FICA tax is $____

11. Gabriella and Steve have adjusted gross income of $96,600 and $82,300 respectively. Calculate their income tax if they delay their marriage until next year so they can file their tax returns as individuals at the single tax rate this year. Their income tax would be $_____

12. Consider the table showing past and projected federal revenue, spending, and GDP. All figures are in billions of dollars rounded to the nearest billion. Find the deficit or surplus and debt as a percentage of GDP in 2000 and 2010. Comment on the changes.

Year	Surplus or deficit	Debt	GDP
2000	228	5300	9818
2010	-1412	14,000	13,937
2020 (projected)a	-468	19,500	10,000

In 2000, the surplus is ___% and the debt as a percentage of GDP is ___%