You want to buy a new sports car from Muscle Motors for $68,000. The contract is in the form of a 60-month annuity due at a 7.85 percent annually. What will your monthly payment be? *

a. $1,736.22

b. $1255.29

c. $1450.87

d. $1,373.92

e. None of the above

Your uncle has $375,000 and wants to retire. He expects to live for another 25 years and to earn 7.5% on his invested funds. How much could he withdraw at the end of each of the next 25 years and end up with zero in the account? *

a. $28,843.38

b. $30,361.46

c. $31,959.43

d. $33,641.50

e. None of the above

Garvin Enterprises bonds currently sell for $1,150. They have a 6-year maturity, an annual coupon of $85, and a par value of $1,000. What is their current yield? *

a. 5.36%

b. 6.12%

c. 7.39%

d. 8.07%

e. None of the above

Suppose the U.S. Treasury offers to sell you a bond for $747.25. No payments will be made until the bond matures 5 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price? *

a. 6.76%

b. 4.86%

c. 5.40%

d. 6.00%

e. None of the above