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#1




Some Sample Problems for y'all
In case you are out of problems ():
1> Deposits are made into a fund at the end of each year starting one year from today. The first payment is $10,000 and payments increase by $500 per year in the second through the tenth year. All subsequent payments increase by 3.5% over the prior payment. If i = .07, find the value of the fund at the end of 20 years a. 563,960 b. 564,010 c. 564,060 d. 564,110 e. 564,160 2> Let A equal the accumulated value on December 31, 2006 of $500 invested at the end of each month during 2006 @ i(4) = .08 Let B equal the present value on January 1, 2006 of A at d(2) = .06 Let C equal the accumulated value on December 31, 2006 of $1,500 invested at the end of each quarter during 2006 at d(12) = .06 Let D equal the present value on January 1, 2006 of C at a nominal annual interest rate of j, convertible once every two years. If B=D, find j. a. .0481 b. .0484 c. .0487 d. .0490 e. .0493 Spoiler: 3> A Loan is to be repaid with level annual payments at the end of each year for 20 years, with the first payment one year from today. The principal portion of the 13th payment is $54.40. The principal portion of the 18th payment is $70.09 Find the total amount of interest paid over the term of the loan a. 632 b. 634 c. 636 d. 638 e. 640 Spoiler: 4> An annuity with 2n annual payments of 1 has it's first payment n+1 years from today. Its present value is 8.00407. An annuity with 2n+1 payments of 1 has it's first payment n years from today. Its present value is 8.63279. Find the annual effective rate of interest a. .0475 b. .0480 c. .0485 d. .0490 e. .0495 Spoiler: 5> Over a 3 year period, a series of deposits are made to a savings account. All deposits within a given year are equal in size and are made at the beginning of each relevant period. Deposits for each year total $1,200. The following chart shows the frequency of deposits and the interest rate credited for each year: Year..........Frequency of Deposits........Interest Rate Credited During Year ..1.............SemiAnnually...................d(12) = 6% ..2.............Quarterly.........................i(3)=8% ..3.............Every 2 months.................delta=7% Find the balance of the account at the end of the 3rd year a. 4050 b. 4055 c. 4060 d. 4065 e. 4070 6> John is to receive an annuity payable at the end of each quarter for 10 years. The first payment, to be made on March 31st, 2006, is $1,000. Each subsequent payment is 1% larger than the previous payment. Jane is to receive an annuity payable at the end of each year for 15 years. The first payment, to be made on December 31st, 2006, is R. Each subsequent payment is $25 less than the previous payment. On January 1, 2008, the present values of the remaining payments to John and Jane are equal. If i=.07, find R. a. 3764 b. 3784 c. 3804 d. 3824 e. 3844 7> A $75,000 loan to be repaid over a 5 year period, may be repaid by Method A or Method B. In Method A, level annual payments are made at the beginning of each year. In method B, level semiannual payments are made at the end of each 6month period. If d(4)=.076225, find the absolute difference in the payments made each year under the two methods. a. 1024 b. 1026 c. 1028 d. 1030 e. 1032 Spoiler: 8> A $1000, 8% 15year bond is purchase to yield i=.09. Coupons are paid semiannually. With 10 years remaining to maturity, the bond is sold at a price which yields i=.0825 to the buyer. Find the effective annual rate of return on the investment of the original bondholder. a. .0961 b. .0967 c. .0972 d. .0978 e. .0984 Spoiler: 9> A 20 year loan is to be repaid with monthly payments beginning one month from today. Just after the 43rd payment has been made, the present value of the remaining payments is B. N is the number of the payment after which the present value of the remaining payments is less than B/2 for the first time. If d(4) = .08, find N. a. 172 b. 173 c. 174 d. 175 e. 176 Spoiler: 10> A $10,000 loan is to be repaid with 40 annual payments at i=.07. The first payment is to be made one year from today. Let A equal the sum of the interest paid in the even numbered payments. Let B equal the sum of the principal paid in the odd numbered payments. Find A+B. a. 14660 b. 14680 c. 14700 d. 14720 e. 14740 Spoiler:  Answer Key: Spoiler: Good Luck! Last edited by MyKenk; 10292006 at 03:22 PM.. Reason: Added Solutions to some of the problems 
#3




Honestly, i haven't gone through them yet, but I will by the end of the weekend. I'm guessing for number 8 that the rates are nominal, as that is generally what we see with bonds. (9% bond with semiannual coupons has 2 coupons per year that are 4.5% of the Face Value each).
I'll let you know once I get through them if I figure out 4 & 10, I don't have solutions to these problems, just the answer key. They are old EA1 questions, so if you're really desperate, you could look through the old EA1 exams and try to find the questions, but I'm not even sure they release those. 
#7




Thanks for the questions. Should 6d be 3824?

#9




I thought we could bring back some practice questions for all of us spring takers.

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