Question 1

You are interested in purchasing a new automobile that costs $50,000. The dealership offers you a special financing rate of 5% APR for 48 months. Assuming that you do not make a down payment on the auto and you take the dealer's financing deal, then your monthly car payments would be closest to:

A. $865.25

B. $1048.36

C. $1151.46

D. $1340.75

Question 2

Atlas Inc. has a net profit margin of 7.0%, a total asset turnover of 2.5, total assets of $500 million, and a book value of equity of $350 million. Atlass current return-on-equity (ROE) is closest to:

A. 38%

B. 25%

C. 17%

D. 41%

Question 3

Consider a growing perpetuity that will pay $200 in one year. Each year after that, you will receive a payment that is 5% larger than the last payment. This pattern of payments will continue forever. If the interest rate is 10%, then the value of this perpetuity is closest to:

1. $1560
2. $3360
3. $4000
4. $2000