If the interest rate is 8%, which of these investments would you prefer?

Multiple Choice

• A payment of $3,000 today.

• A payment of $350 a year for 30 years starting in year 2.

• A payment of $500 in year 1, a payment of $1,800 in year 3, and a payment of $2,200 in year 6.

• A perpetuity of $250 a year starting in year 3.

A car loan requiring quarterly payments carries an APR of 14.00%. What is the effective annual rate of interest (EAR)?

Multiple Choice

• 17.70%

• 16.97%

• 16.23%

• 14.75%

Five years ago bonds were issued at par with 30 years until maturity and a 6% annual coupon. If interest rates for that grade of bonds are currently 9%, what will be the market price of these bonds now?

Multiple Choice

• $705.32

• $846.39

• $564.26

• $1,057.98