1. Sue now has $125. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding? a. $205.83 b. $216.67 c. $228.07 d. $240.08 e. $252.08 2. How much would $20,000 due in 50 years be worth today if the discount rate were 7.5%? a. $438.03 b. $461.08 c. $485.35 d. $510.89 e. $537.78 3. Suppose the U.S. Treasury offers to sell you a bond for $747.25. No payments will be made until the bond matures 5 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price? a. 4.37% b. 4.86% c. 5.40% d. 6.00% e. 6.60% 4. Bob has $2,500 invested in a bank that pays 4% annually. How long will it take for his funds to double? a. 14.39 b. 15.15 c. 15.95 d. 16.79 e. 17.67 5. You want to buy a new sports car 3 years from now, and you plan to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now? a. $11,973 b. $12,603 c. $13,267 d. $13,930 e. $14,626 6. Morin Company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon interest payment of $65. The market requires an interest rate of 8.2% on these bonds. What is the bond's price? a. $903.04 b. $925.62 c. $948.76 d. $972.48 e. $996.79 7. Adams Enterprises’ noncallable bonds currently sell for $1,120. They have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. What is their yield to maturity? a. 5.84% b. 6.15% c. 6.47% d. 6.81% e. 7.17% 8. Assume that you are considering the purchase of a 20-year, noncallable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 8.4% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? a. $1,105.69 b. $1,133.34 c. $1,161.67 d. $1,190.71 e. $1,220.48 9. Grossnickle Corporation issued 20-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 19 years to maturity? a. $1,113.48 b. $1,142.03 c. $1,171.32 d. $1,201.35 e. $1,232.15 10. Malko Enterprises’ bonds currently sell for $1,050. They have a 6-year maturity, an annual coupon of $75, and a par value of $1,000. What is their current yield? a. 7.14% b. 7.50% c. 7.88% d. 8.27% e. 8.68%