Question 7 for 1000 you can purchase a 5 year

Question 7.
For $1,000 you can purchase a 5-year ordinary annuity which will pay you a yearly payment of $263.80
for 5 years. What is the annual interest rate implicit in this investment to the nearest whole percentage
point?
a. 8 percent.
b. 9 percent.
c. 10 percent.
d. 11 percent.
Question 8.
You are considering borrowing $100,000 for 30 years at a compound annual interest rate of 9 percent.
The loan agreement calls for 30 equal annual payments, to be paid at the end of each of the next 30
years. (Payments include both principal and interest.) What is the annual payment that will fully
amortize the loan?
Question 9.
Interest paid (earned) on only the original principal borrowed (lent) is often referred to as __________.
Question 10.
Interest paid (earned) on both the original principal borrowed (lent) and previous interest earned is
often referred to as __________.
Question 11.
You are going to place $12,500 into a certificate of deposit (CD) at a 6% annual rate (compounded
annually) with a maturity of 30 months. How much money will you receive when the CD matures?
a. Necessary information is not available to solve the problem.
b. $14,460
c. $14,491
d. $14,518

Question 12.
You have just graduated and have decided to purchase a brand new sports car to enjoy your newfound
freedom. Your local credit union will provide financing for 60 months at a 9 percent annual rate,
compounded monthly. You will give 15 percent of the $26,000 purchase price in cash to the dealer. The
credit union will be used to finance the remaining 85 percent of the purchase price with the first
payment due 1 month from today. What will be your monthly payment?