Math 160: Study Guide - Chapter 3

  1. Stock transaction problem. Find the amount of principal and commission at buying and selling time. Identify the duration of the investment and compute the annual rate of return for the investment.
  2. Future value: Find the future value.
  3. Compound interest: Find the effective rate, find the amount after a certain time period. Then, for a future value problem, the number of periods before an amount is reached.
  4. Retirement: Find the present value needed to retire, then find the payment needed under a future value to reach that goal.
  5. Future value: Find the future value. Find the future value and then let that amount sit in the account as a compound interest problem. Similar to the Jane / John problem worked in class.
  6. Find the effective rate. Find the present value. Similar to a retirement problem in that a certain annuity is to be paid each year, but the compounding time and the payment times are not the same so you need to work with effective rates.
  7. Home loan: Find the down payment, how much is financed, what the monthly payment will be, what the total payments are, what the interest is, the remaining balance after a fixed time, the equity in the house after so many years, the time to pay off the loan if extra is paid, amount of money saved by paying extra.
  8. Identify which type of problem (simple interest, compound interest, future value annuity, or present value annuity) is applicable.

Notes:

Did I tell you to make sure the compounding period is the same as the deposit period for present value and future value problems? There are at least three problems on the test you will miss if you don't. There is usually a question asking for the effective rate preceding such questions. However, not every question that asks for an effective rate is such a problem.

# 1 2 3 4 5 6 7 8 Total
Points 12 6 12 8 16 12 18 16 100