Quiz 1 ( Atiq)

# Quiz 1 ( Atiq) - Time Remaining 1 In 1958 the average...

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Time Remaining: 1. 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? (Points: 2) 10 8 9 11 None of the above 2. You have the opportunity to buy a perpetuity which pays \$1,000 annually. Your required rate of return on this investment is 15 percent. You should be essentially indifferent to buying or not buying the investment if it were offered at a price of (Points: 2) \$5,000.00 \$6,000.00 \$6,666.67

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\$7,500.00 \$8,728.50 3. Gomez Electronics needs to arrange financing for its expansion program. Bank A offers to lend Gomez the required funds on a loan where interest must be paid monthly, and the quoted rate is 8 percent. Bank B will charge 9 percent, with interest due at the end of the year. What is the difference in the effective annual rates charged by the two banks? (Points: 3) 0.25% 0.50% 0.70% 1.00% 1.25%
Your uncle has agreed to deposit \$3,000 in your brokerage account at the beginning of each of the next five years (t = 0, t = 1, t = 2, t = 3 and t = 4). You estimate that you can earn 9 percent a year on your investments. How much will you have in your account four years from now (at t = 4)? (Assume that no money is withdrawn from the account until t = 4.) (Points: 5) \$13,719.39 \$17,954.13 \$19,570.00 \$21,430.45 \$22,436.12 5. If you buy a factory for \$250,000 and the terms are 20 percent down, the balance to be paid off over 30 years at a 12 percent rate of interest on the unpaid balance, what are the 30 equal annual payments? (Points: 4)

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Quiz 1 ( Atiq) - Time Remaining 1 In 1958 the average...

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