12. value: 1.50 points

A store will give you a 1.50% discount on the cost of your purchase if you pay cash today. Otherwise, you will be billed the full price with payment due in 1 month. What is the implicit borrowing rate being paid by customers who choose to defer payment for the month?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Effective annual rate

%

10. value:

1.50 points

Home loans typically involve points, which are fees charged by the lender. Each point charged means that the borrower must pay 1% of the loan amount as a fee. For example, if the loan is for $200,000 and 4 points are charged, the loan repayment schedule is calculated on a $200,000 loan but the net amount the borrower receives is only $192,000. Assume the interest rate is .75% per month. What is the effective annual interest rate charged on such a loan, assuming loan repayment occurs over 120 months?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.Use a financial calculator or Excel.)

Effective annual interest rate

%

Chapter 5

instructions|help

Question 1 (of 15)Question 2 (of 15)Question 3 (of 15)Question 4 (of 15)Question 5 (of 15)Question 6 (of 15)Question 7 (of 15)Question 8 (of 15)Question 9 (of 15)Question 10 (of 15)Question 11 (of 15)Question 12 (of 15)Question 13 (of 15)Question 14 (of 15)Question 15 (of 15)Save & ExitSubmit9. value: 1.50 points

You take out a 20-year $260,000 mortgage loan with an APR of 9% and monthly payments. In 14 years you decide to sell your house and pay off the mortgage. What is the principal balance on the loan?(Round the monthly loan payment to 2 decimal places when computing the answer.Round your answer to 2 decimal places.)

Principal balance on the loan

$

Chapter 5

instructions|help

Question 1 (of 15)Question 2 (of 15)Question 3 (of 15)Question 4 (of 15)Question 5 (of 15)Question 6 (of 15)Question 7 (of 15)Question 8 (of 15)Question 9 (of 15)Question 10 (of 15)Question 11 (of 15)Question 12 (of 15)Question 13 (of 15)Question 14 (of 15)Question 15 (of 15)Save & ExitSubmit7. value: 1.50 points

A famous quarterback just signed a $16.5 million contract providing $3.3 million a year for 5 years. A less famous receiver signed a $15.5 million 5-year contract providing $4 million now and $2.3 million a year for 5 years. The interest rate is 10%.

a.	What is the PV of the quarterback's contract?(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Present value

$million

b.	What is the PV of the receiver's contract?(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

11. value: 1.50 points

A couple will retire in 50 years; they plan to spend about $34,000 a year in retirement, which should last about 25 years. They believe that they can earn 7% interest on retirement savings.

a.	If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year.(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Annual payment

$

b.	How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $64,000 on their childs college education?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Annual payment

$

Present value

$million

c.	Who is better paid?
	Quarterback Receiver

13. value: 1.50 points

a.	How much will $100 grow to if invested at a continuously compounded interest rate of 9.75% for 7 years?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Future value

$

b.	What if it is invested for 9.75 years at 7%?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Future value

$

14. value: 1.50 points

In April 2013 a pound of apples cost $1.48, while oranges cost $1.12. Three years earlier the price of apples was only $1.27 a pound and that of oranges was $.98 a pound.

a.	What was the annual compound rate of growth in the price of apples?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Compound annual growth rate

% per year

b.	What was the annual compound rate of growth in the price of oranges?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Compound annual growth rate

% per year

c.	If the same rates of growth persist in the future, what will be the price of apples in 2030?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price

$

d.	If the same rates of growth persist in the future, what will be the price of oranges in 2030?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price

$