520 500 460 550 600 C 63530787 C 500 References Multiple Choice Diﬃculty

$5.20$5.00$4.60$5.50$6.00C= $63.53(.0787)C= $5.00ReferencesMultiple ChoiceDiﬃculty:IntermediateSection: 4.4 Simplifications

70.Award:10.00 pointsKwame is willing to pay $185 per month for four years for a car payment. If the interest rate is 4.9percent per year, compounded monthly, and he makes a cash down payment of $2,500, what price carcan he afford to purchase?$10,961.36$10,549.07$8,533.84$8,686.82$8,342.05PV = $2,500 + $185{[1 − 1/(1 + .049/12)4(12)]/(.049/12)}PV = $10,549.07ReferencesMultiple ChoiceDiﬃculty:IntermediateSection: 4.4 Simplifications

71.Award:10.00 pointsSanghyuk will receive payments of $550 per month for ten years. What are these payments worthtoday at a discount rate of 6 percent, compounded monthly?$49,540.40$51,523.74$53,737.08$49,757.69$48,808.17PV = $550{[1 − 1/(1 + .06/12)10(12)]/(.06/12)}PV = $49,540.40ReferencesMultiple ChoiceDiﬃculty:IntermediateSection: 4.4 Simplifications

72.Award:10.00 pointsAssume your employer will contribute $50 per week for twenty years to your retirement plan. At adiscount rate of 5 percent, compounded weekly, what is this employee benefit worth to you today?$29,144.43$35,920.55$32,861.08$26,446.34$36,519.02PV = $50{[1 − 1/(1 + .05/52)20(52)]/(.05/52)}PV = $32,861.08ReferencesMultiple ChoiceDiﬃculty:IntermediateSection: 4.4 Simplifications

73.Award:10.00 pointsMercy has a consulting contract that calls for annual payments of $50,000 per year for five years, withthe first payment due today. What is the current value of this contract if the discount rate is 8.4 percent?$214,142.50$201,867.47$195,618.19$197,548.43$224,267.10PVADue= $50,000[(1 − 1/1.0845)/.084](1.084)PVADue= $214,142.50ReferencesMultiple ChoiceDiﬃculty:IntermediateSection: 4.4 Simplifications

74.Award:10.00 pointsGeller & Lao will deposit $3,000 per quarter for the next three years. The first deposit will be madetoday. The money is expected to earn 2.75 percent per year, compounded quarterly. If the companyhad wanted to deposit one lump sum today, rather than make quarterly deposits, how much would ithave had to deposit to have the same amount saved at the end of the three years?$34,441.56$34,678.35$33,428.87$33,687.23$34,998.01PVADue= $3,000{[1 − 1/(1 + .0275/4)3(4)]/(.0275/4)}(1 + .0275/4)PVADue= $34,678.35ReferencesMultiple ChoiceDiﬃculty:IntermediateSection: 4.4 Simplifications

75.Award:10.00 pointsMichaela has been offered an employment contract for ten years at a starting salary of $65,000 withguaranteed raises of 5 percent per year. What is the current value of this offer at a discount rate of 7percent?$638,724.17$602,409.91$558,845.85$630,500.00$525,000.00PV = $65,000({1 − [(1.05/1.07)10]}/(.07 − .05))PV = $558,845.85ReferencesMultiple ChoiceDiﬃculty:IntermediateSection: 4.4 Simplifications

76.Award:10.00 pointsYour friend agreed to lend you money today, in exchange for payments of $20 per month for the nextsix months. The first payment must be paid today. The interest rate is 1.5 percent per month. How muchtotal interest does your friend expect to earn?$3.94$4.35$1.34$3.63$5.96PVADue= $20[(1 − 1/1.0156)/.015](1.015)PVADue= $115.65Total interest = 6($20)$115.65Total interest = $4.35ReferencesMultiple ChoiceDiﬃculty:IntermediateSection: 4.4 Simplifications

77.Award:10.00 pointsBenjamin purchased an annuity that will pay $5,000 annually for 20 years. He will receive the firstpayment today. What is the value of the annuity today, given a discount rate of 7 percent?