A bank offers a loan that will requires you to pay 10% interest compounded semiannually.Which of the following is closest to the EAR charged by the bank?

A.12.3%

B.10.25%

C.8.2%

D.20.5%

Emma runs a small factory that needs a vacuum oven for brazing small fittings. She can purchase the model she needs for $180,000 up front, or she can lease it for five years for $4200 per month. She can borrow at 7% APR, compounded monthly. Assuming that the oven will be used for five years, should she purchase the oven or should she lease it?

A.Lease, since the present value (PV) of the lease is $12,224 less than the cost of the oven.

B.Lease, since the present value (PV) of the lease is $8642 less than the cost of the oven.

C.Buy, since the present value (PV) of the lease is $32,108 more than the cost of the oven.

D.Lease, since the present value (PV) of the lease is $2212 less than the cost of the oven.

What is the real interest rate given a nominal rate of 6.8%and an inflation rate of 3.1%?

A.4.3%

B.5.7%

C.3.6%

D.5%

a $43,000 new car loan is taken out with the terms 9% APR for 48 months. How much are monthly payments on this loan?

A.$1,070.06

B.$1,177.06

C.$1,284.07

D.$1,391.07

The opportunity cost of capital is the best available expected return offered in the market on an investment of comparable risk and term to the cash flow being discounted.

True

False