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Please provide an explanation of all answers as well as the formula used. 1. Which of the following is a synonym for interest rate ?

Please provide an explanation of all answers as well as the formula used.

1. Which of the following is a synonym for interest rate?

The required rates of return, The cost of capital, The discount rate, All of the above, None of the above

2. If you are calculating how much you would pay at most for an investment that promises a payment of $1,000,000, 3 years from today, you are:

Spending

Compounding

Discounting

Analyzing

None of the above

3. Your grandmother invested one lump sum 17 years ago at 4.25 percent interest. Today, she gave you the proceeds of that investment which totaled $5,539.92. How much did your grandmother originally invest? Round to the nearest cent. Do not include any unit (i.e. $, %, etc.)

4. Your grandparents are talking about their retirement in a year. They told you that they should have enough in their retirement funds to pull $50,000 a year for 20 years, starting one year from today. If the discount rate is 5 percent, how much should they have in their retirement account now? Round to the nearest cent. Do not include any unit (If your answer is $111.11, then type 111.11 without $ sign.)

5. You purchased Honda Civic for $18,290 today. You took an auto loan at the annual interest rate of 3.65%. You are going to make equal monthly payment for next 6 years starting a month from now. How much is your monthly car payment? Round to the nearest cent. Do not include any unit (If your answer is $111.11, then type 111.11 without $ sign.)

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