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Q:

There are 5 novels and 4 biographies. In how many ways can 4 novels and 2 biographies can be arranged on a shelf ?

A) 26100 B) 21600
C) 24000 D) 36000
 
Answer & Explanation Answer: B) 21600

Explanation:

4 novels can be selected out of 5 in 5C4 ways.

2 biographies can be selected out of 4 in 4C2 ways.

Number of ways of arranging novels and biographies = 5C4*4C2  = 30

After selecting any 6 books (4 novels and 2 biographies) in one of the 30 ways, they can be arranged on the shelf in 6! = 720 ways.

By the Counting Principle, the total number of arrangements = 30 x 720 = 21600

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Q:

Payments of $2000 and $1000 were originally scheduled to be paid one year and five years, respectively, from today. They are to be replaced by a $1500 payment due four years from today, and another payment due two years from today. The replacement stream must be economically equivalent to the scheduled stream. What is the unknown payment, if money can earn 7% compounded semiannually?

A) 1548 B) 1348
C) 1648 D) 1748
 
Answer & Explanation Answer: C) 1648

Explanation:

FV1 = Future value of $2000, 1 year later
= PV (1+  i)^n

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Q:

The Indian Cricket team consists of 16 players. It includes 2 wicket keepers and 5 bowlers. In how many ways can a cricket eleven be selected if we have to select 1 wicket keeper and atleast 4 bowlers?

A) 1024 B) 1900
C) 2000 D) 1092
 
Answer & Explanation Answer: D) 1092

Explanation:

We are to choose 11 players including 1 wicket keeper and 4 bowlers  or, 1 wicket keeper and 5 bowlers.

 

Number of ways of selecting 1 wicket keeper, 4 bowlers and 6 other players in 2C1*5C4*9C6 = 840

 

Number of ways of selecting 1 wicket keeper, 5 bowlers and 5 other players in 2C1*5C5*9C5 =252

 

Total number of ways of selecting the team = 840 + 252 = 1092

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Q:

A committee of 5 persons is to be formed from 6 men and 4 women. In how many ways can this be done when at least 2 women are included ?

A) 196 B) 186
C) 190 D) 200
 
Answer & Explanation Answer: B) 186

Explanation:

When at least 2 women are included.

 

The committee may consist of 3 women, 2 men : It can be done in  4C3*6C2  ways

 

or, 4 women, 1 man : It can be done in  4C4*6C1ways

 

or, 2 women, 3 men : It can be done in 4C2*6C3 ways.

 

Total number of ways of forming the committees

 

4C2*6C3+4C3*6C2+4C4*6C1

 

= 6 x 20 + 4 x 15 + 1x 6

 

= 120 + 60 + 6 =186

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Q:

In a box, there are 5 black pens, 3 white pens and 4 red pens. In how many ways can 2 black pens, 2 white pens and 2 red pens can be chosen?

A) 180 B) 220
C) 240 D) 160
 
Answer & Explanation Answer: A) 180

Explanation:

Number of ways of choosing 2 black pens from 5 black pens in 5C2 ways.

 

Number of ways of choosing 2 white pens from 3 white pens in 3C2 ways.

 

Number of ways of choosing 2 red pens from 4 red pens in 4C2ways.

 

By the Counting Principle, 2 black pens, 2 white pens, and 2 red pens can be chosen in 10 x 3 x 6 =180 ways.

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Q:

A chartered bank offers a five-year Escalator Guaranteed Investment Certificate.In successive years it pays annual interest rates of 4%, 4.5%, 5%, 5.5%, and 6%, respectively, compounded at the end of each year. The bank also offers regular five-year GICs paying a fixed rate of 5% compounded annually. Calculate and compare the maturity values of $1000 invested in each type of GIC. (Note that 5% is the average of the five successive one-year rates paid on the Escalator GIC.)

A) 1276.28 B) 1234
C) 1278 D) 1256
 
Answer & Explanation Answer: A) 1276.28

Explanation:

FV = $1000(1.04)(1.045)(1.05)(1.055)(1.06) = $1276.14

 the maturity value of the regular GIC is

 

 FV = $ 1000 x 1.055=  $1276.28

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Q:

Two payments of $10,000 each must be made one year and four years from now. If money can earn 9% compounded monthly, what single payment two years from now would be equivalent to the two scheduled payments?

A) 17296 B) 13296
C) 19296 D) 15296
 
Answer & Explanation Answer: C) 19296

Explanation:

i=j/m

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Q:

Kramer borrowed $4000 from George at an interest rate of 7% compounded semiannually. The loan is to be repaid by three payments. The first payment, $1000, is due two years after the date of the loan. The second and third payments are due three and five years, respectively, after the initial loan. Calculate the amounts of the second and third payments if the second payment is to be twice the size of the third payment.

A) 1389 B) 1359
C) 1379 D) 1339.33
 
Answer & Explanation Answer: D) 1339.33

Explanation:

Given:j=7% compounded semiannually making m=2 and i = j/m= 7%/2 = 3.5%
Let x represent the third payment. Then the second payment must be 2x.
PV1,PV2, andPV3 represent the present values of the first, second, and third payments.

Since the sum of the present values of all payments equals the original loan, then
PV1 + PV2  +PV3  =$4000 -------(1)

PV1   =FV/(1 + i)^n  =$1000/(1.035)^4=  $871.44

At first, we may be stumped as to how to proceed for
PV2 and PV3. Let’s think about the third payment of x dollars. We can compute the present value of just $1 from the x dollars

pv=1/(1.035)^10=0.7089188

PV2   =2x * 0.7089188 = 1.6270013x
PV3   =x * 0.7089188=0.7089188x
Now substitute these values into equation ➀ and solve for x.
$871.442 + 1.6270013x + 0.7089188x  =$4000

2.3359201x  =$3128.558

x=$1339.326
Kramer’s second payment will be 2($1339.326)  =$2678.65, and the third payment will be $1339.33

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