FINC330-02 (Pop Quiz 2; Sep 25) Name 1. TrueFalse (Explain) Effect.docx - FINC330-02(Pop Quiz 2 Sep 25 Name 1 True/False(Explain Effective interest

# FINC330-02 (Pop Quiz 2; Sep 25) Name 1. TrueFalse (Explain) Effect.docx

• Test Prep
• 3

This preview shows page 1 - 3 out of 3 pages.

FINC330-02 (Pop Quiz 2; Sep 25) Name: 1. True/False (Explain): Effective interest rate is always higher than the corresponding nominal interest rate. 2. Which of the following cash flow stream would you choose? Which one would be your last choice? Why? (make sure that your decision makes financial sense) Period 3 Option 1 1000 1000 2000 4000 Option 2 2000 2000 2000 2000 Option 3 4000 2000 1000 1000 Option 4 6000 2000 3. What sum of money now is equivalent to \$8250 four years later, if interest rate is 4% per 6- month period? 4. What's the rate of return you would earn if you paid \$950

#### You've reached the end of your free preview.

Want to read all 3 pages?

Unformatted text preview: for a perpetuity that pays \$85 per les es una ma olen po would sam tvou pa se ne perpetuty inat . year? 5. Gandalf is buying a new magic staff. He can pay (option 1) \$11,000 up front, or he can pay (option 2) \$1,000 up front and pay \$4000, \$3000, \$2500, \$1500 and \$1580.70 over next five years respectively. Although he is a master magician, he does not know much about finance. Now he is asking you to recommend him a payment option. Gandalf's opportunity cost is 10%....
View Full Document

• Spring '17
• DEBORAHGOLDSMITH

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern