ch2 - Question 1 (1 point) Your friend just won the Florida...

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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 20-year 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 360-day year. How much interest would Pace have to pay in a 30-day 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 end-of-month 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?...
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ch2 - Question 1 (1 point) Your friend just won the Florida...

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