____10.Which of the following statements is NOT CORRECT?

a.

The present value of a 3-year, $150 annuity due will exceed the present value of a 3-year, $150 ordinary annuity.

b.

If a loan has a nominal annual rate of 8%, then the effective rate can never be less than 8%.

c.

If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be the same.

d.

The proportion of the payment that goes toward interest on a fully amortized loan declines over time.

e.

An investment that has a nominal rate of 6% with semiannual payments will have an effective rate that is less than 6%.

____11.Last year Toto Corporation's sales were $225 million. If sales grow at 6% per year, how large (in millions) will they be 5 years later?

a.

$271.74

b.

$286.05

c.

$301.10

d.

$316.16

e.

$331.96

____12.You deposit $1,000 today in a savings account that pays 3.5% interest, compounded annually. How much will your account be worth at the end of 25 years?

a.

$2,245.08

b.

$2,363.24

c.

$2,481.41

d.

$2,605.48

e.

$2,735.75

____13.Suppose a U.S. government bond promises to pay $1,000 five years from now. If the going interest rate on 5-year government bonds is 5.5%, how much is the bond worth today?

a.

$765.13

b.

$803.39

c.

$843.56

d.

$885.74

e.

$930.03

____14.How much would $5,000 due in 50 years be worth today if the discount rate were 7.5%?

a.

$109.51

b.

$115.27

c.

$121.34

d.

$127.72

e.

$134.45

____15.Suppose the U.S. Treasury offers to sell you a bond for $747.25. No payments will be made until the bond matures 5 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price?

a.

4.37%

b.

4.86%

c.

5.40%

d.

6.00%

e.

6.60%

____16.Ten years ago, Levin Inc. earned $0.50 per share. Its earnings this year were $2.20. What was the growth rate in Levin's earnings per share (EPS) over the 10-year period?

a.

15.17%

b.

15.97%

c.

16.77%

d.

17.61%

e.

18.49%

____17.How many years would it take $50 to triple if it were invested in a bank that pays 3.8% per year?

a.

23.99

b.

25.26

c.

26.58

d.

27.98

e.

29.46

____18.You want to buy a new sports car 3 years from now, and you plan to save $4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the 3rd deposit, 3 years from now?

a.

$11,973.07

b.

$12,603.23

c.

$13,266.56

d.

$13,929.88

e.

$14,626.38

____19.You want to buy a new sports car 3 years from now, and you plan to save $4,200 per year, beginning immediately. You will make 3 deposits in an account that pays 5.2% interest. Under these assumptions, how much will you have 3 years from today?

a.

$13,956.42

b.

$14,654.24

c.

$15,386.95

d.

$16,156.30

e.

$16,964.11