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Question;115. Downtown Bank is offering 3.4 percent compounded;daily on its savings accounts. You deposit $8,000 today. How much will you have;in your account 11 years from now?;A. $11,628.09;B. $11,714.06;C. $12,204.50;D. $12,336.81;E. $12,414.14;116. You want to buy a new sports coupe for $41,750;and the finance office at the dealership has quoted you an 8.6 percent APR loan;compounded monthly for 48 months to buy the car. What is the effective interest;rate on this loan?;A. 8.28 percent;B. 8.41 percent;C. 8.72 percent;D. 8.87 percent;E. 8.95 percent;117. Beginning three months from now, you want to be;able to withdraw $1,500 each quarter from your bank account to cover college;expenses over the next 4 years. The account pays 1.25 percent interest per;quarter. How much do you need to have in your account today to meet your;expense needs over the next 4 years?;A. $21,630.44;B. $21,847.15;C. $22,068.00;D. $22,454.09;E. $22,711.18;118. You are planning to save for retirement over the;next 15 years. To do this, you will invest $1,100 a month in a stock account;and $500 a month in a bond account. The return on the stock account is expected;to be 7 percent, and the bond account will pay 4 percent. When you retire, you;will combine your money into an account with a 5 percent return. How much can;you withdraw each month during retirement assuming a 20-year withdrawal;period?;A. $2,636.19;B. $2,904.11;C. $3,008.21;D. $3,113.04;E. $3,406.97;119. You want to be a millionaire when you retire in;40 years. You can earn an 11 percent annual return. How much more will you have;to save each month if you wait 10 years to start saving versus if you start;saving at the end of this month?;A. $79.22;B. $114.13;C. $168.47;D. $201.15;E. $240.29;120. You have just won the lottery and will receive $540,000;as your first payment one year from now. You will receive payments for 26;years. The payments will increase in value by 4 percent each year. The;appropriate discount rate is 10 percent. What is the present value of your;winnings?;A. $6,221,407;B. $6,906,372;C. $7,559,613;D. $7,811,406;E. $8,003.11;121. You are preparing to make monthly payments of;$65, beginning at the end of this month, into an account that pays 6 percent;interest compounded monthly. How many payments will you have made when your;account balance reaches $9,278?;A. 97;B. 108;C. 119;D. 124;E. 131;t;122. You want to borrow $47,170 from your local bank;to buy a new sailboat. You can afford to make monthly payments of $1,160, but;no more. Assume monthly compounding. What is the highest rate you can afford on;a 48-month APR loan?;A. 8.38 percent;B. 8.67 percent;C. 8.82 percent;D. 9.01 percent;E. 9.18 percent;123. You need a 25-year, fixed-rate mortgage to buy a;new home for $240,000. Your mortgage bank will lend you the money at a 7.5;percent APR for this 300-month loan, with interest compounded monthly. However;you can only afford monthly payments of $850, so you offer to pay off any;remaining loan balance at the end of the loan in the form of a single balloon;payment. What will be the amount of the balloon payment if you are to keep your;monthly payments at $850?;A. $738,464;B. $745,316;C. $767,480;D. $810,220;E. $847,315;124. The present value of the following cash flow;stream is $5,933.86 when discounted at 11 percent annually. What is the value;of the missing cash flow?;A. $1,500;B. $1,750;C. $2,000;D. $2,250;E. $2,500;125. You have just purchased a new warehouse. To;finance the purchase, you've arranged for a 30-year mortgage loan for 80;percent of the $2,600,000 purchase price. The monthly;to sell an asset 3 years from now for $90,000. The asset;costs $71,000 to produce today. At what rate will the firm just break even on;this contract?;A. 7.87 percent;B. 8.01 percentC. 8.23 percent;D. 8.57 percent;E. 8.90 percent;payment on this loan will be $11,000. What is the effective;annual rate on this loan?;A. 4.98 percent;B. 5.25 percent;C. 5.46 percent;D. 6.01 percent;E. 6.50 percent;126. Consider a firm with a contract;127. What is the present value of $1,100 per year, at a discount rate of;10 percent if the first payment is received 6 years from now and the last;payment is received 28 years from now?;A. $6,067.36;B. $6,138.87;C. $6,333.33;D. $6,420.12;E. $6,511.08;128. You have your choice of two investment accounts.;Investment A is a 5-year annuity that features end-of-month $2,500 payments and;has an interest rate of 11.5 percent compounded monthly. Investment B is a 10.5;percent continuously compounded lump sum investment, also good for five years.;How much would you need to invest in B today for it to be worth as much as;investment A five years from now?;A. $108,206.67;B. $119,176.06;C. $124,318.08;D. $129,407.17;E. $131,008.15;B. $1,053.87C. $1,058.01;D. $1,063.30;E. $1,072.11;129. Given an interest rate of 8 percent per year;what is the value at date t = 9 of a perpetual stream of $500 annual payments;that begins at date t = 17?;A. $3,646.81;B. $4,109.19;C. $4,307.78;D. $6,250.00;E. $6,487.17;130. You want to buy a new sports car for $55,000. The;contract is in the form of a 60-month annuity due at a 6 percent APR;compounded monthly. What will your monthly payment be?;A. $1,047.90;131. You are looking at a one-year loan of $10,000. The interest rate is;quoted as 10 percent plus 5 points. A point on a loan is simply 1 percent (one;percentage point) of the loan amount. Quotes similar to this one are very;common with home mortgages. The interest rate quotation in this example;requires the borrower to pay 5 points to the lender up front and repay the loan;later with 10 percent interest. What is the actual rate you are paying on this;loan?;A. 15.00 percent;B. 15.47 percent;C. 15.55 percent;D. 15.79 percent;E. 15.84 percent;132. Your holiday ski vacation was great, but it;unfortunately ran a bit over budget. All is not lost. You just received an;offer in the mail to transfer your $5,000 balance from your current credit;card, which charges an annual rate of 18.7 percent, to a new credit card;charging a rate of 9.4 percent. You plan to make payments of $510 a month on;this debt. How many less payments will you have to make to pay off this debt if;you transfer the balance to the new card?;A. 0.36 payments;B. 0.48 payments;C. 1.10 payments;D. 1.23 payments;E. 2.49 payments;57. Miller Brothers Hardware paid an annual dividend;of $1.15 per share last month. Today, the company announced that future;dividends will be increasing by 2.6 percent annually. If you require a 12;percent rate of return, how much are you willing to pay to purchase one share;of this stock today?;A. $12.23;B. $12.55;C. $12.67;D. $12.72;E. $12.88;58. Sessler Manufacturers made two announcements;concerning its common stock today. First, the company announced that the next;annual dividend will be $1.75 a share. Secondly, all dividends after that will;decrease by 1.5 percent annually. What is the maximum amount you should pay to;purchase a share of this stock today if you require a 14 percent rate of;return?;A. $11.29;B. $12.64;C. $13.27;D. $14.00;E. $14.21;59. How much are you willing to pay for one share of;Jumbo Trout stock if the company just paid a $0.70 annual dividend, the;dividends increase by 1.6 percent annually, and you require a 10 percent rate;of return?;A. $8.29;B. $8.33;C. $8.47;D. $8.53;E. $8.59;60. Free Motion Enterprises paid a $2.20 per share;annual dividend last week. Dividends are expected to increase by 3.75 percent;annually. What is one share of this stock worth to you today if your required;rate of return is 15 percent?;A. $19.06;B. $19.30;C. $19.56;D. $20.29;E. $20.59;61. Upper Crust Bakers just paid an annual dividend of;$2.80 a share and is expected to increase that amount by 4 percent per year. If;you are planning to buy 1,000 shares of this;B. $14.01;C. $14.56;D. $14.79;E. $15.23;stock next year, how much should you expect to pay per;share if the market rate of return for this type of security is 11.50 percent;at the time of your purchase?;A. $37.33;B. $38.16;C. $38.83;D. $40.38;E. $42.00;62. The common stock;of Textile Mills pays an annual dividend of $1.65 a share. The company has;promised to maintain a constant dividend even though economic times are tough.;How much are you willing to pay for one share of this stock if you want to earn;a 12 percent annual return?;A. $13.75


Paper#51095 | Written in 18-Jul-2015

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