4. You want to buy a new sports car for $48,000. The contract is in the form of a 60-month annuity due at an 8% APR. What will your annual payments be? (12 pts) 5. Malibu industries bond has a 14 percent coupon rate. Interest is paid semi-annually, and the bond has 40 years to maturity. If the investors require 12% yield, what is the bond's value? Is the bond selling at par, at discount or at premium? The par value is $1,000. (10 pts) 7. You plan to make a series of deposits in an interest-bearing account. You deposit $100 in one year, $200 in two years and $300 in three years. If you withdraw $50 in two years, and $100 in four years, how much will you have in five years? The interest rate is 7%? (10 pts) 8. The Clark Co. is borrowing $50,000 for three years at an APR of 9 percent. The principal is to be repaid in equal annual payments over the life of the loan with interest paid annually (Amortization Loan). Payments will be made at the end of each year. Complete the cells marked with "?" in the following table. (15 pts) Total Interest Paid Year Beginning Balance Principal Paid Ending Balance Annuity Payment 1 $50,000 ? $4,500 ? $33,333.33 ? ? ? $1,500 $0.00 Totals 2 ? 23 2 ? ? ? 6. Stokes and Brown, Co. have identified the following two mutually exclusive projects. The required return for both of the projects in 10% Year Project A 0 -$15,000 Project C $12,000 3,000 1,000 1 10,000 2 3,000 1,000 8,000 2,000 14,000 & Calculate the NPV for each project and determine which one is more profitable? (10 pts) b. If the company imposes a payback cut-off of four years, which project should be accepted? (8 pts) c. If you apply the profitability index criterion, with a required rate of return of 10%, which investment would you choose? Calculate and show your results. (8 pts) 3 d. Internal rate of return (IRR) for projects A and C are 10% and 11% respectively. If you apply the IRR criterion which project would you choose? Explain why. (4 pts) 3. Universal Life insurance is trying to sell you an investment policy that will pay you and your heirs $15,000 forever. If the required return is 9%, how much should you pay for the policy? (5 pts)