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##### (TCO 3) You have been approved for a $70,000 loan...

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(TCO 3) You have been approved for a $70,000 loan toward the purchase of a new home at 10% interest. The mortgage is for 30 years. How much are the approximately annual payments of the loan? Hint: Assume you pay yearly. (Points: 3) $7425 $8690 $5740 None of the above 2. (TCO 3) First Choice Bank pays 9% APR compounded quarterly on its business loans. National Emerald Bank pays 13% APR compounded monthly. The EAR for First Choice and National Emerald Bank are: (Points: 3) 9.31% and 13.80%, respectively 9% and 13.80%, respectively 9.31% and 13.50%, respectively 9% and 13.50%, respectively 3. (TCO 3) LED Computer Electronics is considering an investment that will have cash flows of $5,000, $6,000, $7,000 and $10,000 for years 1 through 4. What is the approximate value of this investment today if the appropriate discount rate is 9% per year? (Points: 3) $22,250 $30,520 $22,120 None of the above 4. (TCO 3) Which of the following will increase the total amount of interest earned on an investment assuming that all interest is reinvested? Select all answers that apply: (Points: 4) increasing the frequency of the interest payments decreasing the frequency of the interest payments increasing the interest rate decreasing the interest rate 5. (TCO 3) If you borrow $50,000 today at 10% interest for eight years. How much of your second payment will be applied towards the principal of the loan? (Points: 3) $5,000 $4,372 $4,809 can not be determined with the information given 6. (TCO 3) Match the following terms with the examples as appropriate: (Points: 4) Matching: Answer Potential Matches: : Pure discount loan 1: a promise by the US government to repay a fixed amount at some time in the future. 2: You obtained a 5-month commercial loan. This loan loan will allow you to paid $500 in interest for four months and a final payment of interest and principal at the end of the fifth month. 3: You borrow $3,000 from your bank at 10% interest. You will make no payments for two months but will return the full amount plus interest at the end of three months. 4: You obtained a loan from your bank to buy a car. You will pay $300 per month to cover both interest and principal. : Amortized Loan : Interest-only Loan : Treasury Bill 7. (TCO 3) You are interested in saving to buy a new machine that costs $387,120. You can deposit $32,805 in your bank today. If your bank pays 14% annual interest on its accounts, how long will it take you to save for the new machine? (Points: 4) about 19 years about 5 years about 12 years Can not be determined 8. (TCO 3) Why does money have time value?,Thank you !,Thank you

Paper#4105 | Written in 18-Jul-2015

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