You want to compare two alternative investments. Investment A bears interest at the rate of 6.4%, compounded daily. Alternative B bears interest at the rate of 6.42%, compounded monthly. Which of the following statements is correct, based on these two investment alternatives? Select one: oa. Alternative A has an Effective Annual Rate of 6.6086% b. Alternative B has an Effective Annual Rate of 6.6123% c. Both a. and b. above are correct statements. An inventor who we will call Jack has developed an exciting new process for producing an infinite supply of energy from salt water. Jack believes that he can sell his invention to a major oil company. Jack is asking for a Royalty of $5 Million dollars, payable at the end of year one and then increasing at the rate of 5% per year forever. If an appropriate discount rate is 15%, how much should Jack accept if the company wants to pay him a lump sum amount today? Select one: a. $33.3 Million b. $50 Million c. $500 Million d. There is no correct answer given. Due to a tragic traffic accident, Jill has been totally incapacitated. She has asked the court to award her damages for lost wages. She would of earned $72,000 this year, which was expected to increase by 5% per year for the next 35 years. If an appropriate discount rate is 9%, how much should Jill receive? Select one: a. $1,800,000 b. $1,313,626 c. $486,374 d. None of the above are correct You want to purchase a new house when you graduate. The house that you want costs $600,000. You will make a down payment of $50,000 and finance the remaining $550,000 with a residential mortgage, repayable monthly over 25 years. If the bank is currently charging 8%, compounded semi-annually, on mortgage loans, what is the effective annual interest rate on the loan? Select one: a. 8.16% b. 8.22% c. 8.25% d. 8.10%