1.

A new investment opportunity for you is an annuity that pays $2,600 at the beginning of each year for 3 years. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity?

Select the correct answer.

a. $7,480.43

b. $7,460.43

c. $7,440.43

d. $7,400.43

e. $7,420.43

2.

Suppose you earned a $485,000 bonus this year and invested it at 8.25% per year. How much could you withdraw at the end of each of the next 20 years?

Select the correct answer.

a. $50,302.67

b. $50,284.47

c. $50,311.77

d. $50,320.87

e. $50,293.57

3.

Suppose you just won the state lottery, and you have a choice between receiving $4,500,000 today or a 20-year annuity of $250,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes.

Select the correct answer.

a. 2.43%

b. 1.03%

c. 0.33%

d. 1.73%

e. -0.37%

4.

What's the present value of $15,500 discounted back 5 years if the appropriate interest rate is 4.5%, compounded semiannually?

Select the correct answer.

a. $9,958.38

b. $9,973.38

c. $9,980.88

d. $9,965.88

e. $9,988.38

5.

American Express and other credit card issuers must by law print the Annual Percentage Rate (APR) on their monthly statements. If the APR is stated to be 14.25%, with interest paid monthly, what is the card's EFF%?

Select the correct answer.

a. 12.42%

b. 13.82%

c. 11.02%

d. 15.22%

e. 16.62%