optionals - chap 6

optionals - chap 6 - Chapter 06 _ 1. You can afford car...

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Chapter 06 ________ 1. You can afford car payments of $265 a month for three years. The interest rate is 7.5 percent, compounded monthly. How much can you afford to borrow to buy a car? a. $8,269.67 b. $8,271.83 c. $8,519.20 d. $8,572.44 ________ 2. You want to retire on the day you have $500,000 in your savings account. You expect to earn 5 percent, compounded monthly, on your money during your retirement. Your plan is to withdraw $4,000 a month as retirement income from this account. How many months can you be retired until you run out of money? a. 100.83 b. 125.00 c. 176.94 d. 180.95 ________ 3. A preferred stock pays annual dividends of $3.50. How much are you willing to pay today to buy one share of this stock if you want to earn a 13 percent rate of return? a. $24.29 b. $26.92 c. $29.99 d. $37.14 ________ 4. A project will produce cash flows of $3,000, $4,500, and $5,000 a year for the next three years, respectively. What is the value of these cash flows today at a discount rate of 7.8 percent?
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This note was uploaded on 06/27/2008 for the course FINC 450 taught by Professor Ddavidson during the Spring '08 term at Loyola Chicago.

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optionals - chap 6 - Chapter 06 _ 1. You can afford car...

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