Finance ch. 5 - E 12. Columbus Corp. borrowed $10,000 at a...

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10. Your girlfriend just won the Power Ball lottery. She has the choice of $10,000,000 today or a 30- year annuity of $500,000, with the first payment coming today. What rate of return is built into the annuity? A) 3.08% B) 3.91% C) 2.71% D) 4.10% E) 3.59% Points Earned: 2.5/5.0 Correct Answer(s): A 11. You can buy a perpetuity that pays $1,000 annually, and your required rate of return on this investment is 15%. You should be indifferent to buying or not buying the investment if it were offered at a price of A) $5,000.00 B) $6,000.00 C) $7,500.00 D) $8,728.50 E) $6,666.67 Points Earned: 5.0/5.0 Correct Answer(s):
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Unformatted text preview: E 12. Columbus Corp. borrowed $10,000 at a rate of 8%, simple interest , with interest paid at the end of each month. The bank uses a 360-day year. How much interest would the firm have to pay in a 30-day month? A) $43.65 B) $34.54 C) $66.67 D) $51.29 E) $27.84 Points Earned: 5.0/5.0 Correct Answer(s): C 13. In 1958 the average tuition for one year at an Ivy League school was $1,800. Thirty years later, in 1988, the average cost was $13,700. What was the growth rate in tuition over the 30-year period? A) 12% B) 9% C) 7% D) 6% E) 8% Points Earned: 5.0/5.0 Correct Answer(s): C...
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This note was uploaded on 11/04/2009 for the course BUS FIN 2100 taught by Professor Shmidl during the Spring '09 term at Laramie County Community College.

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Finance ch. 5 - E 12. Columbus Corp. borrowed $10,000 at a...

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