Question 1 -- /5 Which one of the following compounding periods will yield the lowest effective annual rate given a stated future value at year 5 and an annual percentage rate of 10 percent? 1 Annual 2 Monthly 3 Semiannual Continuous Question 2 -- /5 Some time ago, Tracie purchased 11 acres of land costing $77,900. Today, that land is valued at $54,800. How long has she owned this land if the price of the land has been decreasing by 3.5 percent per year? 11.33 years 2 9.87 years * 9.08 years 10.29 years Question 3 --/5 Imprudential, Inc. has an unfunded pension liability of $627 million that must be paid in 21 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. The relevant discount rate is 7.38 percent. What is the present value of this liability? 1 $140,564,661 3 $171,438,907 * $159,803,162 4 $154,519,484 TIMEWUIR ASSighlinteht 2. Attempt 1 Question 4 (-15 ) You borrow $230,000 to buy a house. The mortgage rate is 4.5 percent and the loan period is 25 years. Payments are made monthly. If you pay the mortgage according to the loan agreement, how much total interest will you pay? 1 $153,524 $141,406 3 $147,027 4 $160,408 Question 5 -- / 5 Towne Station is saving money to build a new loading platform. Three years ago, they set aside $23,000 for this purpose. Today, that account is worth $31,406. What rate of interest is Towne Station earning on this investment? 1 10.94 percent 2 8.39 percent (3) 9.47 percent 4 9.01 percent Question 6 -- / 5 What is the effective annual rate of 14.9 percent compounded continuously? 1 16.07 percent 2 15.84 percent 3 15.69 percent 4 16.23 percent Question 7 -- /5 You invested $6,500 in an account that pays 6 percent simple interest. How much more could you have earned over a 10-year period if the interest had compounded annually? $1,201.15 2 $1,049.22 3 $1,182.19 4 $1,240.51 Question 8 -- / 5 Assume the total cost of a college education will be $220,000 when your child enters college in 17 years. You presently have $60,000 to invest. What rate of interest must you earn on your investment to cover the cost of your child's college education? 1 9.22 percent 2 7.94 percent 3 8.25 percent 8.50 percent Question 9 -- /5 A preferred stock pays an annual dividend of $4.10. What is one share of this stock worth today if the rate of return is 9.68 percent? $42.90 2 $41.18 3 $41.48 4 $42.36 Question 10 -- /5 Suppose the first comic book of a classic series was sold in 1954. In 2015, the estimated price for this comic book in good condition was about $310,000. This represented a return of 22 percent per year. For this to be true, what was the original price of the comic book in 1954? $1.33 2 $1.40 * $.75 @ $1.67
