Chapter 4 Quiz Complete Solution

Question: #928

QUESTION 1
1. At a rate of 15%, what is the future value of the following cash flow stream?
Years:     0                    1                  2                   3                   4

                                 |__________|__________|__________|__________|
                 CFs       $0                 $75              $225               $0               $300
0

    $773.37

    $711.63

    $406.88

    $467.90

    $600.00
10 points
QUESTION 2
1.    Suppose you deposited $13,000 in a bank account that pays 5.25% with daily compounding based on a 360-day year. How much would be in the account after 8 months, assuming each month has 30 days?

    13474.22

    13463.02

    13451.82

    13457.42

    13446.22
10 points
QUESTION 3
1.    Partners Bank offers to lend you $50,000 at a nominal rate of 5.0%, simple interest, with interest paid quarterly. An offer to lend you the $50,000 also comes from Community Bank, but it will charge 6.0%, simple interest, with interest paid at the end of the year. What's the difference in the effective annual rates charged by the two banks?

    1.56%

    1.30%

    1.09%

    0.91%

    0.72%
10 points
QUESTION 4
1.    You plan to borrow $35,000 at a 7.5% annual interest rate. The terms require you to amortize the loan with 7 equal end-of-year payments. How much interest would you be paying in Year 2?

    $1,994.49

    $2,099.46

    $2,209.96

    $2,326.27

    $2,442.59
10 points
QUESTION 5
1.    You are hoping to buy a new boat 3 years from now, and you plan to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now?

    $11,973

    $12,603

    $13,267

    $13,930

    $14,626
10 points
QUESTION 6
1.    You decided to deposit your money in the bank at the beginning for the year instead of the end of the year, but now you are making payments of 2750 at an annual interest rate of 5%. How much money will you have available at the end of six year?

    19641

    14249

    15304

    16070

    14961