20. You have the opportunity to purchase a perpetuity which pays $5,000 annually forever. If you require a rate of retum of 8 percent on such investments, what is the most that you would be willing to pay for this security? a. $50,000 b. $60,000 c. $62,500 d. $75,000 e. $10,000 21. Suppose you plan to save $50 per year at 10 percent interest for the next twenty years (treat as an ordinary annuity). Afterwards, you will leave the money in the account for another 10 years. What will the value of the account be at the end of year 30 ? a. $6,354.81 b. $7,427.83 c. $7,922.33 d. $8,591.00 e. $6,752.46 22. Hess Distributors is financing a new truck with a loan of $20,000 to be repaid in five annual installments of $5,276. What is the interest rate on the loan? a. 7% b. 8% c. 9% d. 10% e. none of the above 23. If you have an investment fund that pays 11% interest compounded annually and is currently worth $10,000 and you withdraw $1,000 per year from the fund: a. your balance in the fund will increase in the future b. your balance will remain constant at $10,000 c. your balance will decrease each year and eventually reach zero d. your fund will be spent in 12 years e. both c and d