Finance ch. 5

# Finance ch. 5 - his one single payment six years from today...

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4. How much would \$10,000 due in 100 years be worth today if the discount rate were 10%? A) \$6.30 B) \$4.83 C) \$1.21 D) \$2.49 E) \$0.73 Points Earned: 5.0/5.0 Correct Answer(s): E 5. Your company has just taken out a 1-year installment loan for \$100,000. Monthly payments on the loan will be \$8,978, due at the end of each month. What percentage of the 3rd monthly payment will go toward the repayment of principal? A) 89.06% B) 86.79% C) 88.54% D) 91.70% E) 94.81% Points Earned: 5.0/5.0 Correct Answer(s): A 6. Bob is 20 years old today and is starting to save money, so that he can get his MBA. He is interested in a 1-year MBA program. Tuition and expenses are currently \$20,000 per year, and they are expected to increase by 5% per year. Bob plans to begin his MBA when he is 26 years old, and since all tuition and expenses are due at the beginning of the school year, Bob will make

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Unformatted text preview: his one single payment six years from today. Right now, Bob has \$25,000 in a brokerage account, and he plans to contribute a fixed amount to the account at the end of each of the next six years (t = 1, 2, 3, 4, 5, and 6). The account is expected to earn an annual return of 10% each year. Bob plans to withdraw \$15,000 from the account two years from today (t = 2) to purchase a used car, but he plans to make no other withdrawals from the account until he starts the MBA program. How much does Bob need to put in the account at the end of each of the next six years to have enough money to pay for his MBA? A) \$2,266 B) \$1,494 C) \$3,994 D) \$ 580 E) \$4,494 Points Earned: 2.5/5.0 Correct Answer(s): D...
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Finance ch. 5 - his one single payment six years from today...

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