QUIZ 3

# QUIZ 3 - Question 1 0 out of 2 points In the student-loan...

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Question 1 0 out of 2 points In the student-loan discussed in class (see also the excel file), suppose the student loan is 364 dollars and the bank charges 14.38% interest pay year. If the student pays back by making 30 equal annual payments starting with year 1, what is the total interest amount the student will pay up to and including year 13? (Accuracy is set at the first decimal.) Answer Selected Answer: Correct Answer: Response Feedback: Question 2 0 out of 2 points Pat is an excelent tennis player. Her friend Mat estimated that if she becomes a professional player today, her income will be 5 dollars in year 1 and then will continue to increase by 24.74% each year until year 9. According to Mat's estimates, Pat will be at her peak in year 9. After that point in time, her income in each period will be only 1/8 of her income in the previous period. Suppose Mat's predictions are correct. If Pat plans to retire at the end of year 15 and to save 1/4 of her income each year in an account paying interest at 85% per year, how much will she accumulate by the end of 15? (Accuracy is set at the first decimal) Answer

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Selected Answer: Correct Answer: Response Feedback: Question 3 0 out of 2 points By doing annual updating of a certain production line, a manufacturing company can avoid spending 494.42 dollars today. At an interest rate of 10.26% per year, what is the annual amount the company could afford to spend for the update if its payments begin in year 12 and end in year 27? (Accuracy is set at the first decimal.) Answer Selected Answer: Correct Answer: Response Feedback: The question is asking for the annual amount in the annuity which has z-m+1 payments since it begins in period m and ends in period value X. Thus the value of the series in term of year m-1 X*(1+i) value P equal we have X*(1+i) Solving the above for A gives A=( Question 4 0 out of 2 points
Find the value in terms of "year-6" dollars of the sum of the following two cash flow series Series A (Arithmetic): At=91.68+(22)(t-(-16)), t=-16,. ..,23 Series B (Geometric): Bt=148(1+0.05) t-(-20) , t=-20,. ..,16 assuming the interest is 19.61% per period. (Accuracy is set at the first decimal.) Answer Selected Answer: Correct Answer:

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## This note was uploaded on 09/24/2011 for the course ECN 801 taught by Professor Bardis during the Winter '11 term at Ryerson.

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QUIZ 3 - Question 1 0 out of 2 points In the student-loan...

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