Answers5 - e 1. a. b. c. d. e. c 2. I. Alpo, Inc. invested...

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e 1. Alpo, Inc. invested $500,000 to help fund a company expansion project scheduled for eight years from now. How much additional money will they have eight years from now if they can earn 9 percent rather than 7 percent on this money? a. $58,829.69 b. $86,991.91 c. $118,009.42 d. $126,745.19 e. $137,188.23 c 2. Which of the following statements concerning the effective annual rate are correct? I. When making financial decisions, you should compare effective annual rates rather than annual percentage rates. II. The more frequently interest is compounded, the higher the effective annual rate. III. A quoted rate of 6 percent compounded continuously has a higher effective annual rate than if the rate were compounded daily. IV. When choosing which loan to accept, you should select the offer with the highest effective annual rate. a. I and II only b. I and IV only c. I, II, and III only d. II, III, and IV only e. I, II, III,and IV d 3. The highest effective annual rate that can be derived from an annual percentage rate of
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This note was uploaded on 06/15/2008 for the course ACC 501 504 taught by Professor Na during the Spring '08 term at University of Texas at Austin.

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Answers5 - e 1. a. b. c. d. e. c 2. I. Alpo, Inc. invested...

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