Question
1. Homer Guys will pay you $2,500 a year for 11 years in exchange for $31,300 today. What interest rate will you earn on this
1. Homer Guys will pay you $2,500 a year for 11 years in exchange for $31,300 today. What interest rate will you earn on this annuity? A) 2.10 percent B) 2.08 percent C) 2.78 percent D) 3.12 percent E) 2.99 percent
2. You have just won a cash prize! You can either receive $6,500 a year for 25 years or $100,000 as a lump sum payment today. What is the interest rate on the annuity option? A) 2.75 percent B) 5.31 percent C) 3.81 percent D) 4.15 percent E) 4.99 percent
3. Sunshine Trucking recently purchased a new truck costing $219,800. The firm financed this purchase at 7.6 percent interest with monthly payments of $2,435. How many years will it take the firm to pay off this debt? A) 11.12 years B) 11.79 years C) 11.23 years D) 11.19 years E) 11.22 years
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