This preview shows pages 1–4. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: Question 1 (1 point) Your friend just won the Florida lottery. She has the choice of $15,000,000 today or a 20year annuity of $1,050,000, with the first payment coming one year from today. What rate of return is built into the annuity? Student response: Student Response Answer Choices a. 2.79% b. 3.10% c. 3.44% d. 3.79% e. 4.17% Score:0 / 1 Question 2 (1 point) What's the future value of $1,500 after 5 years if the appropriate interest rate is 6%, compounded semiannually? Student response: Student Response Answer Choices a. $1,819.33 b. $1,915.08 c. $2,015.87 d. $2,116.67 e. $2,222.50 Score:1 / 1 Question 3 (1 point) Pace Co. borrowed $25,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month. The bank uses a 360day year. How much interest would Pace have to pay in a 30day month? Student response: Student Response Answer Choices a. $136.32 b. $143.49 c. $151.04 d. $158.59 e. $166.52 Score:1 / 1 Question 4 (1 point) You own an oil well that will pay you $30,000 per year for 10 years, with the first payment being made today. If you think a fair return on the well is 8.5%, how much should you ask for if you decide to sell it? Student response: Student Response Answer Choices a. $202,893 b. $213,572 c. $224,250 d. $235,463 e. $247,236 Score:1 / 1 Question 5 (1 point) Last year Mason Corp's earnings per share were $2.50, and its growth rate during the prior 5 years was 9.0% per year. If that growth rate were maintained, how many years would it take for Mason's EPS to double? Student response: Student Response Answer Choices a. 5.86 b. 6.52 c. 7.24 d. 8.04 e. 8.85 Score:0 / 1 Question 6 (1 point) Suppose you take out a $10,000 loan at a 6% nominal annual rate. The terms of the loan require you to make 12 equal endofmonth payments each year for 4 years, and then an additional final (balloon) payment of $4,000 at the end of the last month. What will your equal monthly payments be? Student response: Student Response Answer Choices a. $131.06 b. $137.96 c. $145.22 d. $152.86 e. $160.91 Score:0 / 1 Question 7 (1 point) You deposit $1,000 today in a savings account that pays 3.5% interest, compounded annually. How much will your account be worth at the end of 25 years? Student response: Student Response Answer Choices a. $2,245.08 b. $2,363.24 c. $2,481.41 d. $2,605.48 e. $2,735.75 Score:1 / 1 Question 8 (1 point) An investment costs $1,000 (CF at t = 0) and is expected to produce cash flows of $75 at the end of each of the next 5 years, then an additional lump sum payment of $1,000 at the end of the 5th year. What is the expected rate of return on this investment?...
View
Full
Document
This document was uploaded on 04/29/2010.
 Spring '09
 Finance, Annuity

Click to edit the document details