# ADMS3530-Midterm-F09 - Name Section ID # Professor...

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2 Numerical questions (4 points each) 1. Your cousin just came home from a poker tournament in Las Vegas and is now trying to pay off a gambling debt of \$5,000. You have agreed to pay off the debt for him today, and in return he has agreed to pay you \$250 per month over the next two years with payments beginning immediately. What is the effective annual interest rate you are charging him? A) 19.75% B) 19.86% C) 21.77% D) 22.26% E) 23.45% 2. Your parents are willing to pay for your MBA degree and want to put aside funds today even though you will not be entering MBA school for another 3 years (from today). If they can earn 4.5% annually on the funds and your MBA school will cost \$35,000 at the beginning of each year of the two year program, how much money do they need to set aside today? A) \$57,435 B) \$60,020 C) \$65,653 D) \$67,243 E) \$70,186 3. You have inherited funds from your grandmother’s estate and want to buy a property in Florida which costs \$250,000. You have enough funds for a 30% down payment and you can obtain a mortgage for the balance at a five-year, fixed rate of 5.5% (APR compounded semiannually). How much will you still owe at the end of five years assuming a 20-year amortization period? A) \$147,172
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## This note was uploaded on 04/11/2011 for the course ADMS 3530 taught by Professor Unknown during the Spring '09 term at York University.

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ADMS3530-Midterm-F09 - Name Section ID # Professor...

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