п»їChapter six The Time Worth of Money-Annuities and Other Issues
6. one particular Annuities
1) You wish to get $2, 1000 to be repaid in doze monthly installments of $189. 12. The interest per annum rate is usually: A) 24%.
2) For those who have $20, 1000 in an accounts earning 8% annually, what constant volume could you withdraw each year and possess nothing outstanding at the end of 5 years? A) $3, 525. 62
B) $5, 008. 76
C) $3, 408. 88
D) $2, 465.
3) If you invest $750 every six months in 8% compounded semi-annually, just how much would you collect at the end of 10 years? A) $10, 065
B) $10, 193
C) $22, 334
D) $21, 731
4) A commercial lender will bank loan you $7, 500 for two years to buy a car. The money must be repaid in twenty-four equal monthly installments. The annual interest rate on the loan is 12% of the delinquent balance. What is the amount of the monthly payments? A) $282. 43
B) $390. 52
C) $369. 82
D) $353. 05
5) Your company has received a $50, 000 loan from an industrial finance company. The gross annual payments happen to be $6, 202. 70. In the event the company is usually paying 9% interest per year, how various loan payments must the corporation make? A) 15
6) ________ usually are involve adding money towards the end of the period and allowing it to grow. A) Discount
C) Annuity thanks
D) Both W and C
7) When comparing premium due to common annuities, annuity due annuities will have bigger: A) present values.
B) premium payments.
C) foreseeable future values.
D) the two A and C.
E) all the above.
8) Gina Dare, who wants to be a uniform, plans to retire at the end of 40 years. Gina's prepare is to spend her cash by adding into an IRA by the end of every year. What is the total amount that she needs to put in annually in order to accumulate $1, 000, 000? Assume that the account can earn a rate of 11. five per cent. Round off to the nearest $1. A) $1, 497
B) $5, two-hundred eighty-one
D) $3, 622
9) Francis Peabody merely won the $89, 500, 000 California State Lottery. The lottery offers the champion a choice of receiving the winnings within a lump sum or perhaps in dua puluh enam equal gross annual installments being made at the outset of each year. Assume that funds can be invested at 7. 65%. Francis is attempting to decide if to take the lump sum and also the annual payments. What is the amount of the huge that would be precisely equal to the current value of the years installments? Rounded off towards the nearest $1. A) $89, 000, 500
B) $38, 163, 612
C) $13, 092, 576
D) $41, 083, 128
10) Since time improves for an amortized bank loan, the ________ decreases. A) interest paid per repayment
B) principal paid out per payment
C) the exceptional loan equilibrium
D) both A and C
E) all of the previously mentioned
six. 2 Perpetuities
1) What is a series of similar payments intended for an infinite period of time named? A) A perpetuity
B) A great axiom
C) A cash cow
D) An premium
2) You have only purchased a share of preferred share for $50. 00. The most liked stock pays off an annual dividend of $5. 50 per share permanently. What is the interest rate of return on your investment? A). 055
3) This current value of your perpetuity lessens when the ________ decreases. A) number of expense periods
B) annual discount charge
C) perpetuity repayment
D) both M and C
4) You are going to spend $800 in an account at the start of each of 20 years. The account are left to compound to get an additional 20 years. At the end of the 41st season you will begin receiving a perpetuity from your account. In the event the account pays off 14%, how much will you get each year through the perpetuity (round to local $1, 000)? A) $140, 000
B) $150, 000
C) $160, 000
D) $170, 000
5) You are thinking about the acquiring XYZ Provider's perpetual recommended stock which in turn pays a perpetual gross annual dividend of $8 per share. In case the appropriate low cost rate for this investment can be 14%, precisely what is the price of a single share with this stock? A) $7. 02
B) $57. 13
C) $36. 43
D) Cannot be identified...