I have 30 Minutes to answer all questions Question 2 (2 points)

What is the future value of a 13-year ordinary annuity with annual payments of $20,000, evaluated at a 7.7 percent interest rate? Round it to two decimal places, and do not include the $ sign, e.g., 123456.54

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Question 3 (2 points)

An investment project has the following expected cash flows: Year Cash Flows 1 $10,000 2 16,000 3 16,000 4 44,000 The discount rate is 9.9 percent. What is the investments present value? Round it to two decimal places without the $ sign,e.g., 23456.34

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Question 4 (2 points)

Marcela needs to have $57,000 in 11 years on a savings plan that requires monthly contributions. If she can earn 11 percent APR with monthlycompoundingon the savings plan, what is the amount that she will have to invest every monthfor the next 11 years? Round it to two decimal places and do not include the $ sign, e.g., 1234.56.

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Question 5 (2 points)

You are thinking about buying a new car, for which you have negotiated the price to $25,000. You have $3,000 to put towards the down payment and plan to get a loan for the rest. If you can get an annual interest rate of 6.4 percent APR (with monthly compounding) over a 3-year loan, what would be your monthly payment? Round it to two decimal place (cents), e.g., 234.56.

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Question 6 (2 points)

Suppose you plan to retire in 40 years. If you make 10 annual investments of $1,000 into your retirement account for the first 10 years, and then no more contributions to the account for the remaining 30 years. If the retirement account earns a fixed 9% annual interest, how much will you have at your retirement? Round it to two decimal placeswithout the $ sign, e.g., 1234567.89.

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Question 7 (2 points)

Find the effective annual rate (EAR) for a 11.3% APR with monthly compounding. Express in percentage but do not include the % sign, and round it to twodecimal place, e.g., 9.45 (for .0945 or 9.45%)

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Question 8 (2 points)

Suppose you are going to receive $22,000 per year for 9 years at the beginning of each year; thus you receive the first payment today. Compute the present value of the cash flows if the appropriate interest rate is 11 percent. Round it two decimal places, and do not include the $ sign, e.g., 123456.78.

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Question 9 (2 points)

The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $20,000 per year forever. If the required return on this investment is 7 percent, how much are you willing to pay for the policy? (Do not include the dollar sign ($), and round your answer to two decimal places.(e.g., 123456.45)

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Question 10 (2 points)

Which one of the following statements is NOT true about amortization?

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With an amortized loan, each loan payment contains some payment of principal and an interest payment.

Amortization refers to the way the borrowed amount (principal) is paid down over the life of the loan.

An amortized loan will have a lower payment than an interest-only loan, holding everything else the same.

The final ending balance of an amortization table should be zero.

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