You have borrowed a loan of $20,000 from Chase to buy a car. You have promised Chase to make one mortgage style payment in each year. If you want to borrow this loan for one year and the interest rate is 7.5% every year, what is the total payment in year one?

Select one:

a. $21,500.00

b. $20,000.00

c. $15,000.00

d. $ 25,000.00

e. None of the above

Bond A has a coupon rate of 9%, with a three-year maturity and a face value of $1,000. If the discount rate now or future is 9%, you want to buy bond A at year 1 and hold it until its maturity, what is the total expected return for your investment?

Select one:

a. 10.00%

b. 19.00%

c. 18.00%

d. 20.00%

e. none of the above

Your friend promises you a perpetuity of $1 every year, which starts in year 1. However, your friend is an absent-minded guy, paying you $2 at year 10 but no payment at year 9. Except for these two years, in other years, the payment is always $1. Which of the following is right about the present value at year zero of your friends all payments if r = 5%?

Select one:

a. $20.03

b. $18.03

c. $21.97

d. $19.97

e. None of the above