Andy Z. opens a sketchy rent to own store where his catch phrase is, “I’ll divide your cost by 20 and you can pay that amount for 24 months.” In the fine print it says that the first payment is due at purchase and every subsequent payment is due at monthly intervals after that.

What are Andy’s store’s customers paying on their loans?

• .218
• .0012
• .01655
• .268
• .182

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

At the beginning of each year Apple declares a dividend of 7 to be paid semi-annually. An economist forecasts an increase of 9% per year. At the beginning of the year Bob buys some shares at $X per share and optimistically predicts a 22% yield convertible semi-annually.

Calculate X.

• $54.68
• $87.40
• $113.62
• $65.77
• $103.94

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

Brian purchases a 7 year annuity with payments at the end of every quarter for $X. The first payment is $350 and each subsequent payment is $50 more.

How much did Brian pay for the annuity if the interest was 14% convertible quarterly?

• $75,990.43
• $16,155.86
• $50,816.33
• $16,721.00
• $1,982.40

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

Jeffery invests $4,000 at an annual effective rate of 7%. The interest is paid every year and Jeffery reinvests it at annual rate i. At the end of 12 years the accumulated interest is $7,500.

If Jane invests $1,000 at the end of each year for 25 years at a rate of interest of 10%, and she reinvests his interest that is paid annually into an account at an effective rate of I, what is Jane’s accumulated interest at the end of 25 years?

• $108,415.03
• $125,777.77
• $54,641.48
• $77,990.75
• $123,276.77

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

Mason receives $23,000 from a life insurance policy. He uses the fund to purchase different annuities, each costing $11,500. His first annuities is an 18 year annuity-immediate paying K per year. The second annuity is a 7 year annuity paying 2K per year. Both annuities are based on an annual effective interest rate of i, i>0.

Determine i.

• .053
• 2.08
• .052
• .5
• .99

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

Which of these are true about annuities?

• An annuity due is one that requires payments at the end of every month.
• A geometric perpetuity present value can be represented by K/(i-r).
• Because an increasing annuity immediate has an annuity due equation in its equation, it becomes an annuity due.

• I only
• II only
• III only
• II and III
• I, II, and III are all false

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

Find the present value of $100 payable at the beginning of each three month period for the next five years, when interest is at the rate of 6% per annum, compounded quarterly.

• 1413
• 1717
• 1723
• 1743
• 1816

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.

A business has been showing a net profit of $10000 per annum (available at the end of the year) for many years. The owner feels that the business will continue to provide the same net profit forever. He offers the business for sale for the present value of its future earnings at an interest rate of 8% per annum effective.

How much is the owner asking as a sale price for the business?

• 120,000
• 125,000
• 130,000
• 135,000
• 150,000

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.

Kathryn deposits 100 into an account at the beginning of each 4-year period for 40 years. The account credits interest at an annual effective interest rate of i. The accumulated amount in the account at the end of 40 years is X, which is 5 times the accumulated amount in the account at the end of 20 years.

Calculate X.

• 6,195
• 6,300
• 6,385
• 6,415
• 6,487

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.

For a given positive integer [math]n[/math], a rate of interest [math]i[/math] can be found such that [math]4s_{\overline{2n}|} = 9s_{\overline{n}|}[/math]. Express in terms of [math]n[/math] how long it will take for money to double at this rate of interest.

• 3n
• 3.05n
• 3.11n
• 3.15n
• 3.22n

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.