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 ExitSubmit 9 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 ExitSubmit 7 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 $

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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

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

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

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