10) An investment will pay you S120 in one year and $200 in two years. If the interest rate is 7%, what is the present value of these cash flows? A) S294.69 B) $286.84 C) $299.07 D) $320.00 11. A bank is negotiating a loan. The loan can either be paid off as a lump sum of $120.000 at the end of five years, or as equal annual payments at the end of each of the next five years. If the interest rate on the loan is 8%, what annual payments should be made so that both forms of payment are equivalent? A) $28,637 B) $32,728 C) $16,364 D) $20,455 12 12. A bank offers a home buyer a 25-year loan at 6% per year. If the home buyer borrows $150,000 from the bank, how much must be repaid every year? A) $14,080.81 B) $18,774.42 C) $16,427.61 D) S11,734.01 13 13) A businessman wants to buy a truck. The dealer offers to sell the truck for either $120,000 now, or eight yearly payments of $20,000. Which of the following is closest to the interest rate being offered by the dealer? A) 5.9% B) 9.996 C) 69% D) 7.9% 14 14. You are considering purchasing a new home. You will need to borrow $270,000 to purchase the home. A mortgage company offers you a 20-year fixed rate mortgage at 6% APR. If you borrow the money from this mortgage company, your monthly mortgage payment will be closest to: A) $3094 B) $1934 C) $1547 D) $2708 1: 15 A bank offers a loan that will requires you to pay 8% interest compounded semiannually. Which of the following is closest to the EAR charged by the bank? A) 16.32% B) 9.796 C) 6.53% D) 8.16% 16, A 10% APR with quarterly compounding is equivalent to an EAR of A) 9.81% B) 10.47% C) 10.00% D) 10.38% 17) A house costs $143,000. It is to be paid off in exactly ten years, with monthly payments of S1708.65. What is the APR of this loan? A) 8.65% B) 7.65% C) 6.65% D) 5.65% 18) A pottery factory purchases a continuous belt conveyor kiln for $45,000. A 8.6% APR loan with monthly payments is taken out to purchase the kiln. If the monthly payments are $560,35, over what term is this loan being paid? A) 9 years B) 11 years C) 10 years D) 8 years 19. A Xerox DocuColor photocopier costing $45,000 is paid off in 60 monthly installments at 7.40% APR. After three years the company wishes to sell the photocopier. What is the minimum price for which they can sell the copier so that they can cover the cost of the balance remaining on the loan? A) S16,009 B) S28,015 C) $20,011 D) $24,013 20 An investor buys a property for $699,000 with a 25-year mortgage and monthly payments at 7.90% APR. After 18 months the investor resells the property for $766,947. How much cash will the investor have from the sale, once the mortgage is paid off? A) $164,346 B) $115,042 C) $65,738 D) $82,173