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Question;41. Assume that you own an annuity that will pay you \$15,000;per year for 12 years, with the first payment being made today. You need money today to start a new business;and your uncle offers to give you \$120,000 for the annuity. If you sell it, what rate of return would;your uncle earn on his investment?;a. 6.85%;b. 7.21%;c. 7.59%;d. 7.99%;e. 8.41%;42. What annual payment must you receive in order to earn a;6.5% rate of return on a perpetuity that has a cost of \$1,250?;a. \$77.19;b. \$81.25;c. \$85.31;d. \$89.58;e. \$94.06;43. What is the present value of the following cash flow stream;at a rate of 6.25%?;Years: 0 1 2 3 4;CFs: \$0 \$75 \$225 \$0 \$300;a. \$411.57;b. \$433.23;c. \$456.03;d. \$480.03;e. \$505.30;44. What is the present value of the following cash flow stream;at a rate of 12.0%?;Years: 0 1 2 3 4;CFs: \$0 \$1,500 \$3,000 \$4,500 \$6,000;a. \$9,699;b. \$10,210;c. \$10,747;d. \$11,284;e. \$11,849.;45. What is the present value of the following cash flow stream;at a rate of 8.0%?;Years: 0 1 2 3;CFs: \$750 \$2,450 \$3,175 \$4,400;a. \$7,917;b. \$8,333;c. \$8,772;d. \$9,233;e. \$9,695;46. You sold a car and accepted a note with the following cash;flow stream as your payment. What was;the effective price you received for the car assuming an interest rate of 6.0%?;Years: 0 1 2 3 4;CFs: \$0 \$1,000 \$2,000 \$2,000 \$2,000;a. \$5,987;b. \$6,286;c. \$6,600;d. \$6,930;e. \$7,277;I/;47. At a rate of 6.5%, what is the future value of the;following cash flow stream?;Years: 0 1 2 3 4;CFs: \$0 \$75 \$225 \$0 \$300;a. \$526.01;b. \$553.69;c. \$582.83;d. \$613.51;e. \$645.80;48. Your father paid \$10,000 (CF at t = 0) for an investment;that promises to pay \$750 at the end of each of the next 5 years, then an;additional lump sum payment of \$10,000 at the end of the 5th year. What is the expected rate of return on this;investment?;a. 6.77%;b. 7.13%;c. 7.50%;d. 7.88%;e. 8.27%;49. You are offered a chance to buy an;asset for \$7,250 that is expected to produce cash flows of \$750 at the end of;Year 1, \$1,000 at the end of Year 2, \$850 at the end of Year 3, and \$6,250 at;the end of Year 4. What rate of return;would you earn if you bought this asset?;a. 4.93%;b. 5.19%;c. 5.46%;d. 5.75%;e. 6.05%;50. What?s the future value of \$1,500 after 5 years if the;appropriate interest rate is 6%, compounded semiannually?;a. \$1,819;b. \$1,915;c. \$2,016;d. \$2,117;e. \$2,223

Paper#51050 | Written in 18-Jul-2015

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