1. If the ABC firm borrows $2,000 for 90 days and at the end of the 90 days pays back the $2,000 and $105 in interest; what is the APR using a 360 day year? _______________________________

2. If the XYZ Co. plans to sell some 270 day commercial paper at a 7% per annum discounted and is expected to have $550,000 in dealer placement fees, what is the effective rate of a $120,000,000 issue? ( 4 pts )

3. You deposit $500 per month at the end of each month for the next 25 years into an account that pays 4% interest. How much could you withdraw at the end of each month for the next 20 years? You save for 25 and withdraw for 20 years.(2 pts) _____________________

4. If the exchange rate on 1/1/94 was 3 pesos to the dollar and you took $20,000 to Mexico and put it in a Mexican bank @50% interest, what was your annual rate of return in dollars if the exchange rate was 6 pesos to $1 one year later when you went to get your money and bring the dollars back to the US? ______________________________________. ( 1 pts )

5. If trade credit terms are 2/15, net 60, what is the effective annual interest rate of not taking the discount and paying on day 55? ____________________

6. If the ABC Co. needs a $200,000 loan for six months, what will the APR be if there is a 40% compensating balance required, the interest rate is 10%, interest is not discounted and the company must borrow the funds to be used for the 40% compensating balance? ________________________( 3 pts )

7. Your firm recently purchased a truck. If your firm got a $50,000 loan @ 6% and agrees to pay $2,000 per month; how many months will it take to pay for the truck? Loan amount is $50,000. ____________________________

8. You lend a friend $70,000, which your friend will repay in seven equal annual payments of $12,000 with the first payment to be received one year from now. What rate of return do you earn? _______________________________

9. You are trying to pay for retirement in 10 years, and currently you have $200,000 in a savings account and $300,000 in stocks. In addition you plan on adding to your savings by depositing $1000 per month in your saving accounts at the end of each month for the next 10 years. Assuming your savings and stock accounts return 5%, how much will you have at the end of 10 years? _________________________________( 2 pts )

10. Given the following cash flows, what is the max you should pay for the investment if you want 8% return on your money? ( 2 pts )

Time Period	Cash Flows
0 is a neg. 50,000	(50, 000)
Year 1	$24,000
Year 2	$27,000
Year 3	$80,000

11. Consider the following cash flows:

Time Period	Expected Cash Flows
1	$100
2	$400
3	$500
4	??CF??
5	$800
Total Present Value (at a 10% discount rate)= $1,771.99

Note that the present value of all five cash flows (including the unknown cash flow at the end of year 4) is $1,771.99. What is the value of the unknown cash flow at period 4? (Worth 2 points)

12. Your firm recently sold an asset and financed the sale of the asset. The firm took back a $170,000 loan on the equipment sale with monthly payments and 8% interest. The loan was a 5-year loan. Your firm now needs cash and desires to sell the loan. If investors require 12% rate of return to invest in this type of loan and 6 payments have been made on the loan, how much will your firm loose from the sale of this financial asset? _________________________________________ ( 3 pts )

13. If prices are expected to increase by 3% per year, how much do you need in your retirement account if you want $3,000 per month in todays dollars, you expect to retire in 35 years, the rate of return on your retirement account is 6% and you want to receive money from your account for 25 years after you retire? Also how much do you need to save each month for the next 35 years so that you can have the amount you need? __________________________________________________________________________ (3 PTS)

14. Factoring A/R (discounted). What is the APR if $100,000 face amount of A/R are factored carrying 60-day credit terms, 2% factor fee, 6% reserve, and interest @ 1%/MO on advances.( 4 pts )