20 pts Question 9 Trenton is considering the purchase of a perpetuity la consol bond) from the British Government. The bond makes payments of $200 per year and is currently selling for $3.000. What is the annual cost of capital of this bond? 6.25% Answer does not exist 0.00% 6.67% 20 pts Question 10 Claude is looking to purchase of an investment with a three-year life. One potential option promises a payment of $7.500 next year and the payments are expected to grow at 10% per year for the subsequent two years. If Claude's required return on the investment is 7.5%, what should he be willing to pay for this investment? $19.983.15 $24325.00 $18.651.39 521420.76 20 pts Question 11 DV BO go : esc $ ! 1 e 2 # 3 & 7 6 8 9 4 W Q E R T Y ab S D F H G J lock 7 C V B N 20 pts Question 11 Traci wants to accumulate $8,000 for her Hawaiian vacation. She plans to invest $150 each month in a fund that earns 10.5% per year (APR). How many months will she need to save before she can afford the trip? -72.15 months 43.96 months 72.15 months 53.33 months 46.03 months 20 pts Question 12 Blake owns an annuity that pays $8,000 per year for the next years. He wants to purchase a $150,000 luxury car with the money from investing the annuity payments at the end of the year period. What annual interest rate does Blake need to achieve to afford his purchase? 52.00% Answer does not exist 38.50 17.59% 012018 RO : ET esc F ! $ 4 8 6 8 9 1 2 3 W E R T Y U S D F G JK Z C V B N M Question 13 20 pts Cheyenne has the option to buy two different annuities. The first starts in six years and pays $3,500 per year for five years. The second begins in 10 years and pays $1,800 per year for six years. Currently, Cheyenne is very risk-averse and thus her current required return is 3.2%. In nine years, she expects to be more financially secure and her cost of capital will increase to 17.1% from then on. If each annuity costs $5,000 today, which annuity for annuities), if any, should Cheyenne purchase? How much value will she realize from the purchases, if she makes any purchases? Purchase both 58.615.43 value realized from fost $1.443.73 from second Purchase forst: $8,615 43 value realized Purchase bots10,937.90 value realized from first $1.443.73 from second Purchase first: $10,937.90 value realised from furst Question 14 20 pts Yolanda is going to make five annual deposits of $7000 into an account that pays 8.9%. The first deposit will occur in 2020 What size equal withdrawals can Yolanda make each year from the account if the first withdrawal is in 2027 and the last occurs in 20317 $10,721.05 $15.271.10 59.916.57 $12.71432 20 8 F. & 7 2 1 3 5 4 6 8 Q W E R T Y U STATE A S D F G H J K ack Z X B N. M D Question 15 20 pts Iggy recently won the lottery. To receive her winnings, the lottery is offering her two choices: an annuity of $0.5 million per year for the next 15 years, or a single payment of $10 million right now. If legy expects to earn 12% annual interest on her investments, which option is better and by how much in present value terms? The nuity, by $1.58 million The single payment, by $2.50 milion The single payment, by $36.10 milion The single paytrent by $6.59 milion The annuity, by $8.64 million D Question 16 20 pts Reginald's dad offers to give him one of the following two options: a cash gift of $30,000, or an interest free loan of $100,000 The loan is repaid in five equal annual payments over the subsequent five years. Assume Reginald's opportunity cost of funds is 3.5% in present value terms, which option is better for Reginald, and how much better is it? The cash gif, by 554.670.46 The loan, by $37.249 32 The cash gift, by 59.698.95 The loan, by $45.150.52 6 ESC 888 54 @ 2 $ 4 8 & 7 ) 0 3 6 8 W E R T Y STATE 0 S D F G H J K Fock Z X B N M