lOMoAR cPSD| 26712239
lOMoAR cPSD| 26712239
FINANCE 301 – {CORPORATION FINANCE}
PREP ACTUAL EXAM QUESTIONS BY
PROF SARA SMIAROWSKI
FINANCE 301 QUIZ 1
1. You are considering buying a condo in Boston for $900,000. You plan to make a down payment of
$90,000 and finance $810,000 with a 25 year loan. If the interest rate is 5.25%, what is the
monthly payment, assuming you'll pay the mortgage at the end of every month.
ANSWER: FVA = A(FVIFA); where r/12 and n*12
FVIFA = [(1+r)^n - 1]/r
2. At the reading of the will, you learn that your inheritance will allow you to receive the amount of
$530 at the end of each year for a total of 12 consecutive years. However, because of your young
age, these amounts will not begin until the end of 3 years. If the interest rate is 8.00%, what is the
equivalent present value of the inheritance?
ANSWER: PVA = A(PVIFA)/(1+r)^no. of years missed
= 530(PVIFA)/(1.08)^2
PVIFA = https://miniwebtool.com/pvifa-calculator/
3. Burton gifted the amount of $3700 to his favorite grandson by depositing it into an account that
earns an interest rate of 5.60% per year and compounds interest 2 times per year. Burton
stipulated that his grandson cannot spend the money for 19 years. Calculate to the nearest dollar
and cents how much will be in the account when Burton's grandson is able to spend the money.
, lOMoAR cPSD| 26712239
ANSWER: FV = PV(1 + r/m)^mn
= $10,566.72
https://www.calculatorsoup.com/calculators/financial/future-value-calculator.php
lOMoAR cPSD| 26712239
FINANCE 301 – {CORPORATION FINANCE}
PREP ACTUAL EXAM QUESTIONS BY
PROF SARA SMIAROWSKI
FINANCE 301 QUIZ 1
1. You are considering buying a condo in Boston for $900,000. You plan to make a down payment of
$90,000 and finance $810,000 with a 25 year loan. If the interest rate is 5.25%, what is the
monthly payment, assuming you'll pay the mortgage at the end of every month.
ANSWER: FVA = A(FVIFA); where r/12 and n*12
FVIFA = [(1+r)^n - 1]/r
2. At the reading of the will, you learn that your inheritance will allow you to receive the amount of
$530 at the end of each year for a total of 12 consecutive years. However, because of your young
age, these amounts will not begin until the end of 3 years. If the interest rate is 8.00%, what is the
equivalent present value of the inheritance?
ANSWER: PVA = A(PVIFA)/(1+r)^no. of years missed
= 530(PVIFA)/(1.08)^2
PVIFA = https://miniwebtool.com/pvifa-calculator/
3. Burton gifted the amount of $3700 to his favorite grandson by depositing it into an account that
earns an interest rate of 5.60% per year and compounds interest 2 times per year. Burton
stipulated that his grandson cannot spend the money for 19 years. Calculate to the nearest dollar
and cents how much will be in the account when Burton's grandson is able to spend the money.
, lOMoAR cPSD| 26712239
ANSWER: FV = PV(1 + r/m)^mn
= $10,566.72
https://www.calculatorsoup.com/calculators/financial/future-value-calculator.php
