MAT 105 Exam 1a February 10, 2006
This exam contains 13 questions worth
100 points.
Name (print):
Student Number:
Multiple choice and short answer questions.
No work is required. Indicate the answer to a multiple choice question by clearly circling the letter corresponding to
the closest answer. Erase corrections completely.
1. (5 points) The interest rate used to compute the in-
terest on a CD each month is the
A. nominal interest rate
B. simple interest rate
C. periodic interest rate
D. annual interest rate
E. effective interest rate
F. none of the above
2. (5 points) Change 37
2500 to a percent.
A. 21.42857%
B. 2.142857%
C. 0.2142857%
D. 0.0214286%
E. 1.48%
F. 0.148%
G. 0.0148%
H. 0.000148%
3. (5 points) What number is 15%of47?
A. 3.133333
B. 0.031915
C. 7.05
D. 1.808511
E. 55.294118
F. 39.95
4. (5 points) You are investing $15,000 in a 10-year
CD at 5.9% APR for a child’s education. Complete
each sentence by circling the letter beside the choice
that makes the sentence true. No calculations are re-
quired.
(a) During the last 5years the CD will earn
A. less interest than the first 5years
B. the same interest as the first 5years
C. more interest than the first 5years
(b) The CD will earn more interest if
A. interest is compounded monthly.
B. it doesn’t matter which compounding.
C. interest is not compounded.
D. interest is compounded daily
5. (5 points) Simple interest
A. Is a form of usury.
B. Provides an accurate estimate of a 401-(k)
plan’s performance.
C. Is earned on the amount deposited together
with previously accrued interest.
D. Is calculated at the end of each period on a
savings account.
E. Is calculated by multiplying by 100%.
F. Can be used to help calculate a credit card
balance.
6. (5 points) Dale has decided to set up an IRA. How
much should she deposit every month into an ac-
count paying 6.25% interest compounded monthly
so that the account will be worth $25,000 in 18
years? Which of the following could be used to solve
this?
A. 25,000 = P M T 1 + 0.0625
12 12·18
−1
0.0625
12 !
B. 25,000 = P M T 1−1 + 0.0625
12 −12·18
0.0625
12 !
C. log 25,000 = log (1 + 0.0625 ·18)12·18
D. 25,000 = P(1 + 0.0625 ·18)
E. 25,000 = P1 + 0.0625
18 12·18
F. None of the above.
