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finance homework mcq eco282

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Question;31. John House;has taken a $250,000 mortgage on his house at an interest rate of 6% per year.;If the mortgage calls for twenty equal annual payments, what is the amount of;each payment? A. $21,796.14;b. $10,500.00;c. $16,882.43;d. None of;the above;32. John House;has taken a 20-year, $250,000 mortgage on his house at an interest rate of 6%;per year. What is the value of the mortgage after the payment of the fifth;annual installment?;a. $128,958.41;B. $211,689.53;c. $141,019.50;d. None of;the above;33. If the;present value of $1.00 received n years from today at an interest rate of r is;0.3855, then what is the future value of $1.00 invested today at an interest;rate of r% for n years?;a. $1.3855;B. $2.594;c. $1.70;d. Not;enough information to solve the problem;34. If the;present value of $1.00 received n years from today at an interest rate of r is;0.621, then what is the future value of $1.00 invested today at an interest;rate of r% for n years?;a. $1.00;B. $1.61;c. $1. 621;d. Not;enough information to solve the problem;35. If the;future value of $1 invested today at an interest rate of r% for n years is;9.6463, what is the present value of $1 to be received in n years at r%;interest rate?;a. $9.6463;b. $1.00;C. $0.1037;d. None of;the above;36. If the;future value annuity factor at 10% and 5 years is 6.1051, calculate the;equivalent present value annuity factor;a. 6.1051;B. 3.7908;c. 6.7156;d. None of;the given ones;12;Junjie Liu ? Econ 282 Practice;Multiple Choice;37. If the present value annuity factor at 10% APR for 10;years is 6.1446, what is the equivalent future value annuity factor?;a. 3.108 B. 15.9374 c. 2.5937;d. None of the above;38. If the present value annuity factor at 12% APR for 5;years is 3.6048, what is the equivalent future value annuity factor?;a. 2.0455 B. 6.3529;c. 1.7623;d. None of;the above;39. Which of;the following statements is true?;a. Present;value of an annuity due is always less than the present value of an equivalent;annuity factor for a given interest rate;B. The present value of an annuity approaches the present;value of a perpetuity as n goes to infinity for a given interest rate;c. Both A;and B are true;d. Both A;and B are false;40. If the;present value annuity factor at 8% APR for 10 years is 6.71, what is the;equivalent future value annuity factor?;a. 3.108;B. 14.487;c. 2.159;d. None of;the above;41. You are;considering investing in a retirement fund that requires you to deposit $5,000;per year, and you want to know how much the fund will be worth when you retire.;What financial technique should you use to calculate this value?;a. Future;value of a single payment;B. Future value of an annuity;c. Present;value of an annuity;d. None of;the above;42. Mr. Hopper;is expected to retire in 25 years and he wishes accumulate $750,000 in his;retirement fund by that time. If the interest rate is 10% per year, how much;should Mr. Hopper put into the retirement fund each year in order to achieve;this goal? [Assume that the payments are made at the end of each year];a. $4,559.44;b. $2,500;C. $7,626.05;d. None of the above;13;43. Mr. Hopper;is expected to retire in 30 years and he wishes accumulate $1,000,000 in his;retirement fund by that time. If the interest rate is 12% per year, how much;should Mr. Hopper put into the retirement fund each year in order to achieve;this goal?;A. $4,143.66;b. $8,287.32;c. $4,000;d. None of;the above;44. Which of;the following statements is true?;a. Present;value of an annuity is always greater than the present value of equivalent;annuity due for a given interest rate;B. The future value of an annuity due is always greater than;the future value of an equivalent ordinary annuity at the same interest rate;b. Both A;and B are true;c. Both A;and B are false;45. You would;like to have enough money saved to receive a growing perpetuity, growing at a;rate of 5% per year, the first payment being $50,000 after retirement, so that;you and your family can lead a good life. How much would you need to save in;your retirement fund to achieve this goal? (assume that the growing perpetuity;payments start one year from the date of your retirement. The interest rate is;10%)?;A. $1,000,000;b. $10,000,000;c. $2,000,000;d. None of;the above;46. You would;like to have enough money saved to receive a growing perpetuity, growing at a rate;of 4% per year, the first payment being $60,000 after retirement, so that you;and your family can lead a good life. How much would you need to save in your;retirement fund to achieve this goal? (assume that the growing perpetuity;payments start one year from the date of your retirement. The interest rate is;10%)?;a. $1,500,000;B. $1,000,000;c. $600,000;d. None of;the above;47. You would;like to have enough money saved to receive a growing annuity for 20 years;growing at a rate of 5% per year, the first payment being $50,000 after;retirement. That way, you hope that you and your family can lead a good life;after retirement. How much would you need to save in your retirement fund to;achieve this goal.(assume that the growing annuity payments start one year from;the date of your retirement. The interest rate is 10%)?;a. $1,000,000;b. $425,678.19;C. $605,604.20;d. None of the above;14;Junjie Liu ? Econ 282 Practice;Multiple Choice;48. You would;like to have enough money saved to receive a growing annuity for 25 years;growing at a rate of 4% per year, the first payment being $60,000 after;retirement, so that you and your family can lead a good life. How much would;you need to save in your retirement fund to achieve this goal? (assume that the;growing perpetuity payments start one year from the date of your retirement.;The interest rate is 12%)?;a. $1,500,000;B. $632,390;c. $452,165;d. None of;the above;49. In the;growing annuity and growing perpetuity formulas, the most important assumption;that is needed for the formulas to work correctly is;a. r g;d. No;assumption is needed;50. Which of;the following statements regarding simple interest and compound interest are;true?;a. Problems;in finance generally use the simple interest concept;B. Problems in finance generally use the compound interest;concept;c. It does;not really matter whether you use simple interest or compound interest for;solving problems in finance;d. None of;the above;51. If you;invest $100 at 12% APR for three years, how much would you have at the end of 3;years using simple interest?;A. $136;b. $140.49;c. $240.18;d. None of;the above;52. If you;invest $100 at 12% APR for three years, how much would you have at the end of 3;years using compound interest?;a. $136;B. $140.49;c. $240.18;d. None of;the above;53. Which of;the following statements is true?;A. The process of discounting is the inverse of the process;of compounding;b. Ending;balances using simple interest is always greater than the ending balance using;compound interest at positive interest rates;c. Present;value of an annuity due is always less than the present value of an equivalent;annuity at positive interest rates;d. All of;the above are true;15;Junjie Liu ? Econ 282 Practice;Multiple Choice;54. The;concept of compound interest is most appropriately described as;a. Interest;earned on an investment;b. The total;amount of interest earned over the life of an investment C. Interest earned on;interest;d. None of;the above;55. Ms.;Colonial has just taken out a $150,000 mortgage at an interest rate of 6% per;year. If the mortgage calls for equal monthly payments for twenty years, what;is the amount of each payment? (Assume monthly compounding or discounting.);A. $1254.70;b. $1625.00;c. $1263.06;d. None of;the above are true;56. An;investment at 10.47% effective rate compounded monthly is equal to a nominal;(annual) rate of;a. 10.99%;b. 9.57%;C. 10%;d. None of;the above;57. An;investment at 12% nominal rate compounded monthly is equal to an annual rate;of: A. 12.68%;b. 12.36%;c. 12%;d. None of;the above;58. Mr.;William expects to retire in 30 years and would like to accumulate $1 million;in the pension fund. If the annual interest rate is 12% per year, how much;should Mr. Williams put into the pension fund each month in order to achieve;his goal? Assume that Mr. Williams will deposit the same amount each month into;his pension fund and also use monthly compounding.;A. $286.13;b. $771.60;c. $345.30;d. None of;the above;59. An;investment at 10% nominal rate compounded continuously is equal to an;equivalent annual rate of;a. 10.250%;B. 10.517%;c. 10.381%;d. None of;the above;16;60. The present value of a $100 per year perpetuity at 10%;per year interest rate is $1000. What would be the present value if the;payments were compounded continuously?;a. $1000.00 B. $1049.21;c. $1024.40;d. None of;the above

 

Paper#49168 | Written in 18-Jul-2015

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