19

1. Your grandmother just gave you $12,000 as a gift for your stellar academic performance. You immediately invested the amount in an account that pays an interest rate of 7.2 percent per year. How much will you have in your account 7 years from today?
2. A.$23,411.88
3. B.$17,587.01
4. C.$27,018.43
5. D.$19,522.92

1 points

Question 20

1. You are planning to save for retirement over the next40years.To do this,you will invest$500a month in a stock account and$300a month in a bond account.The return on the stock account is expected to be 9.6percent,and the bond account will pay 5percent.When you retire,you will combine your money into an account with a 6percent return.You plan to make monthly withdrawals of $11,000each and expect to live for 30years in retirement.How much do you expect to leave as bequest to your beneficiaries?
2. A.$9,729,112
3. B.$2,100,842
4. C.$5,290,721
5. D.$8,578,258

1 points

Question 21

1. You borrowed $290,000 to purchase a home using a fifteen year mortgage with a stated rate of 3.125 percent per annum, and monthly payment. Calculate your loan balance just after making payments for five years.
2. A.$207,967
3. B.$231,822
4. C.184,009
5. D.$193,333

1 points

Question 22

1. You are planning to save for retirement over the next40 years. To do this, you will invest $500 a month in a stock account and $300 a month in a bond account. The return on the stock account is expected to be 9.6percent, and the bond account will pay 5percent. When you retire, you will combine your money into an account with a 6percent return. How much can you withdraw each month during retirement assuming a 30-year withdrawal period?
2. A.$8,722.43
3. B.$19,539.70
4. C.$11,821.04
5. D.$17.342.61

1 points

Question 23

1. You are considering borrowing money from a bank.You have received the following quotations from four banks.Which bank should you borrow from?
2. Bank A:APR of 4.78percent compounded annually
3. Bank B:APR of 4.73compounded semi-annually
4. Bank C:APR of 4.70compoundedmonthly
5. Bank D:APR of 4.71percent compounded daily
6. A.Bank C
7. B.Bank D
8. C.Bank A
9. D.Bank B

1 points

Question 24

1. You want to borrow $38,400 and can afford monthly payments of $960 for 48 months, but no more. Assume monthly compounding. What is the highest APR rate you can afford?
2. A.9.24percent
3. B.7.43percent
4. C.9.01percent
5. D.8.87percent

1 points

Question 25

1. You are considering two projects with the following cash flows:
2. Project YProject XYear 1$9,500$6,000Year 2$9,000$6,900Year 3$6,900$9,000Year 4$6,000$9,500
3. Which one of the following statements is true concerning the two projects given a positive discount rate?
4. A.Both projects have the same future value at the end of year 4.
5. B.Project Y has both a higher present value and a higher future value than project X.
6. C.Project X has a higher present value at time zero than project Y
7. D.Both projects have the same present value at time zero.

1 points

Question 26

1. An insurance company is trying to sell you an investment policy that will pay you and your heirs $50,000per year forever.If the required return on this investment is 5.4percent,how much will you pay forthe policy?
2. A.$925,925.93
3. B.$1,627,950.42
4. C.$1,265,455.25
5. D.$872,688.17

1 points

Question 27

1. Beginning three months from now, you want to be able to withdraw $2,300 each quarter from your bank account to cover college expenses. The account pays 1.45 percent interest per quarter. How much do you need to have in your account today to meet your expense needs over the next four years?
2. A.$41,086.02
3. B.$19,934.56
4. C.$32,633.32
5. D.$28,785.91

1 points

Question 28

1. You are given that the present value (value at time t =0)of the following cash flow stream is $15,750.The appropriate discount rate is 7.4percent.What is the missing cash flow?
2. YearCash Flow1$4,2002$4,2003????4$3,7005$3,700
3. A.$5,100.52
4. B.$3,503.46
5. C.$6,345.25
6. D.$4,921.77

1 points

Question 29

1. What is the effective annualratefor a stated APR of 12.3 percent with weekly compounding?
2. A.12.84percent
3. B.12.98percent
4. C.13.07percent
5. D.13.02percent

1 points

Question 30

1. You just took up a 30-year mortgage loan of $250,000to buy your dream home,at a mortgage rate of 4.00percent.You immediately decided that you will pay an additional amount of $400(you prefer this to a 15-year mortgage becauseof its flexibility) every month to pay off the loan earlier. If you are able to do this each month, by how many years will you shorten the length of time it will take to pay off your loan?
2. A.5.43years
3. B.8.29years
4. C.11.47years
5. D.10.68years