#### Description of this paper

##### general business data bank

**Description**

solution

**Question**

Question;1. PVIF(10%, 1)?;a.;0.909;b.;1;c.;1.1;d.;1.21;e.;1.331;2. What is the relationship between;FVIF(r%, N) and PVIF(r%, N)?;a.;PVIF;is greater than FVIF;b.;FVIF;is a sum of PVIF from n=1 to n=N;c.;PVIF;is an inverse of FVIF;d.;PVIF;is used for an annuity;e.;FVIF*PVIF=2.0;3. You want to buy a $15,000 car. If;you borrow money from the dealer, they are willing to give you a 1 year loan;and you need to make a single payment one year from today at zero interest. If;you borrow money from a bank for the same one year period and make a cash;payment to the dealer right now (using the money you borrow from the bank), you;can enjoy a $1,000 discount from a dealer. The bank interest rate is 12% and;you need to make a single payment one year from today to pay off the debt. Which alternative do you like better. Basically, you need to borrow money, either;from the dealer or from the bank. What is the difference between the future;payments of these two choices?;a.;Loan;from the dealer, more than $2,000;b.;Bank;more than $2,000;c.;Loan;from the dealer, less than $2,000;d.;Bank;less than $2,000;e.;Equivalent;4. Susie Orman argues that you can;have more money by saving $100 each month (starting at the end of this month;for 12 deposits) instead of saving $1,200 at the end of each year. To check;whether that is true, you are going to compare saving $600 every six months for;a year (starting from 6 months from today for 2 deposits) vis-?-vis $1,200 at;the end of the year. What is the future value of $600 saved every six months;for a year at the end of the first year at 10% APR?;a.;$1,100;b.;$1,135;c.;$1,230;d.;$1,740;e.;$1,200;5. How long does it take to triple;your investment at 6% per year?;a.;7.2;years;b.;10.2;years;c.;12.9;years;d.;14.6;years;e.;18.9;years;6. Which of followings is NOT the;characteristics of a perpetuity?;a.;A;perpetuity continues for a fixed time period.;b.;Value;of a perpetuity can be calculated as ?PMT/i?;c.;In;a perpetuity, returns are earned in the form of a series of cash flows.;d.;A;perpetuity is a constant infinite stream of identical cash flows.;e.;Real;estate and preferred stock are effectively perpetuities.;7. If an investment of $87,250 is;earning 5% interest rate compounded annually, how long will it take for this;investment to reach a value of $99,750 if no additional withdrawals or no;deposits are being made during the period?;a.;2.47;years;b.;2.52;years;c.;2.74;years;d.;2.61;years;e.;2.83;years;8. If a security of $17,200 is worth;$20,390 three years in the future and assuming that no withdrawals or deposits;are made, what is the implied interest rate that the investor expects to earn;on the security?;a.;4.19%;b.;5.84%;c.;6.78%;d.;7.82%;e.;8.24%;9. Keanu?s financial planner suggested;once he crosses a threshold of $4,991,331 in savings, he will have enough money;for retirement. Keanu has nothing saved for his retirement yet, so he has to;start depositing $85,000 in retirement fund at a fixed rate of 12.00% at the;end of each year. How long will it take for Keanu to retire?;a.;15.64;years;b.;18.40;years;c.;23.00;years;d.;24.84;years;e.;Keanu;will not be able to retire;10. You?ve decided to buy a house that is;valued at $1 million. You have $500,000 as a down payment on the house and you;take out a mortgage for the rest. Your bank is offering you a 30-year standard;mortgage at a fixed nominal rate of 9% or a 15-year mortgage at a fixed nominal;rate of 9%. How much larger must your monthly payment would be?;a.;$1,048.22;b.;$1,205.45;c.;$1,519.92;d.;$1,729.56

Paper#51212 | Written in 18-Jul-2015

Price :*$22*