29) A loan that calls for periodic interest payments and a lump sum principal payment is 29) loan. referred to as a(n) A) amortized B) modified C) pure discount Dy interest-only E balloon 30) An amortized loan A) requires that all payments be equal in amount and include both principal and interest. B) repays both the principal and the interest in one lump sum at the end of the loan C) may have equal or increasing amounts applied to the principal from each loan o) requires that all interest be repaid on a monthly basis while the principal is repaid at E) requires the principal amount to be repaid in even increments over the life of the term. payment. the end of the loan term. loan. 31) Southern Tours is considering acquiring Holiday Vacations. Management believes 31) Holiday Vacations can generate cash flows of $218,000, $224,000, and $238,000 over the next three years, respectively. After that time, they feel the business will be worthless. If the desired rate of return is 14.5 percent, what is the maximum Southern Tours should pay today to acquire Holiday Vacations? A) $538,407.71 B) $545,920.61 C) $519,799.59 D) $595,170.53 E) $538,615.08 4122 It.AE 32) You have some property for sale and have received two offers. The first offer is for $89,500 today in cash. The second offer is the payment of $35,000 today and an additional guaranteed $70,000 two years from today. If the applicable discount rate is 11.5 percent, which offer should you accept and why? A) It does not matter which offer you accept as they are equally valuable. B) You should accept the first offer as it is a lump sum payment. C) You should accept the second offer because it has the larger net present value. D) You should accept the $89,500 today because it has the higher net present value E) You should accept the $89,500 today because it has the lower future value