### Dr. Sarah's Finance Problem Sheet

Recall that on average, you are expected to spend 1.5-2 hours outside of class
for EVERY hour in class
on this course, since you must practice in order to be able to
do the problems quickly and gain
common sense skills.
If you have been doing this (and continue to),
then you will be prepared for this test.
Notice in the financial math segment, we have learned formulas, applied
them to real life, and communicated our ideas in writing.
You should view exams in this course
primarily as a learning experience,
as reflected in the relatively low percentage of the grade (see syllabus).
This means that exams are not only an opportunity for you
to demonstrate your mastery of the material, but are also an opportunity
for you to be challenged with new material in order for you to make
new connections. To encourage exams as a learning experience
some extra points will be granted for test revisions.
My exams are considered challenging,
since I require that you really understand the material and can use this
understanding to quickly answer questions.
Usually there are
students who receive a perfect score, and the average is typically a
C. If you generally are not a good test taker, then do not worry,
since you can still do fine in this course
by doing well in the other aspects of this class.

To study for the exam, make sure that you can do the following problems
quickly, and that you really understand the underlying ideas.
Make sure that you understand the "math common
sense" we have gone over in class
and the "calc keys" that will work with your calculator
for each type of problem.
On Sunday before the exam,
I will post answers
only to problems 1, 2 and 3
on the WebCT newsgroup, but I advise you to
work on these first and use common sense to see whether your answer
looks good before looking at the posting on WebCT.

**In addition**
review notes from class and labs
(Wile E, Jane and Joan, and the Condo lab),
WebCT quizzes and the web based problems.

The exam will test
your skill at doing problems, your understanding of problems
that you've done, and your skill at communicating mathematics in writing.
**
One 8.5*11 sheet with writing on both sides
allowed. Calculator is mandatory.**

#### Write down the setup, explain why (in words) you chose
the formula that you did, solve the problem on your calculator, and
write down "math common sense" (ie did your answer make sense or not and why):

### Problem 1

If I put in $350.00 in an account compounding monthly
at 6.5%, how much do I have at the end of 5 years?
How much should I have put in if I'd wanted to end up with
$5000 at the end of 5 years, assuming that I compound monthly
at 6.5%?
If I put in $350 in an account compounding monthly
at 6.5%, how long will it take for the money to reach
$100,000?
### Problem 2

If I put in $350 each month into an account compounding monthly
at 6.5%, how much do I have at the end of 5 years?
How much did I put in total? How much interest did I earn?
How much should I have put in each month
if I'd wanted to end up with
$5000 at the end of 5 years, assuming that I compound monthly
at 6.5%? How much did I put in
total? How much interest did I earn?
If I put in $350 each month in an account compounding monthly
at 6.5%, how long will it take for the money to reach
$100,000?
**Setup and understand common sense, but do not solve.**
Given the answer, how would I calculate how much I put in
total and how much I earned?
### Problem 3

I'm going to buy a 30,000 car and finance it at 6.5%, compounded
monthly. I'll put 10% down.

-How much do I need to take out as a loan?

-How much do I need to pay each
month if my loan is for 5 years?
How much did I put in
total over the life of the loan?
How much total interest do I pay over the life of the loan?

-How long is my loan period if my monthly payment is actually
$100 a month? **Setup and understand common sense, but do not solve!**
### Problem 4

Be sure that you could explain information given on a student loan
statement or an Excel amortization table (see
class notes, condo lab, and web based problems 2.3 1,2 and
3 as a review of this), and that you could relate that information
to by-hand formulas that we have used and answer questions on it.
You will not be tested on Excel formulas such as =B3*$c$2, but
you might be asked how to write down how you would get a number in an
excel box using by-hand formulas, or you might be asked to use an
Excel table (and your knowledge of how it works)
in order to answer questions.