1. (TCO 3) You have been approved for a $70,000 loan toward the purchase of a new home at 12% interest. The mortgage is for 30 years. How much are the approximately annual payments of the loan? Hint: Assume you pay yearly. (Points : 3) $2613 $8690 $5740 None of the above 2. (TCO 3) First Choice Bank pays 9% APR compounded quarterly on its business loans. National Emerald Bank pays 13% APR compounded monthly. The EAR for First Choice and National Emerald Bank are: (Points : 3) 9.31% and 13.80%, respectively 9% and 13.80%, respectively 9.31% and 13.50%, respectively 9% and 13.50%, respectively 3. (TCO 3) LED Computer Electronics is considering an investment that will have cash flows of $5,000, $6,000, $7,000 and $10,000 for years 1 through 4. What is the approximate value of this investment today if the appropriate discount rate is 9% per year? (Points : 3) $22,250 $30,520 $22,120 None of the above 4. (TCO 3) You deposited $3,000 in your bank account today. An increase in which of the following will increase the future value of your deposit assuming that all interest is reinvested? Assume the interest rate is a positive value. Select all answers that apply: (Points : 4) interest rate initial amount of your deposit frequency of the interest payments length of the investment period 5. (TCO 3) If you borrow $50,000 today at 10% interest for eight years. How much of your second payment will be applied towards the principal of the loan? (Points : 3) $5,000 $4,372 $4,809 can not be determined with the information given 6. (TCO 3) Match the following terms with the examples as appropriate: (Points : 4) Potential Matches: 1 : a promise by the US government to repay a fixed amount at some time in the future. 2 : You obtained a 5-month commercial loan. This loan loan will allow you to paid $500 in interest for four months and a final payment of interest and principal at the end of the fifth month. 3 : You borrow $3,000 from your bank at 10% interest. You will make no payments for two months but will return the full amount plus interest at the end of three months. 4 : You obtained a loan from your bank to buy a car. You will pay $300 per month to cover both interest and principal. Answer : Pure discount loan : Amortized Loan : Interest-only Loan : Treasury Bill 7. (TCO 3) You are interested in saving to buy a new machine that costs $1,105. You can deposit $250 in your bank today. If your bank pays 8% annual interest on its accounts, how long will it take you to save for the new machine? (Points : 4) about 19 years about 9 years about 4.5 years Can not be determined 8. (TCO 3) How can we apply the concept of time value of money in evaluating a mortgage? (Points : 6)