# finance data bank

Question # 00005277 Posted By: spqr Updated on: 12/13/2013 01:58 PM Due on: 12/15/2013
Subject Finance Topic Finance Tutorials:
Question

115. Downtown Bank is offering 3.4 percent compounded daily on its savings accounts. You deposit \$8,000 today. How much will you have in your account 11 years from now?
A. \$11,628.09
B. \$11,714.06
C. \$12,204.50
D. \$12,336.81
E. \$12,414.14

116. You want to buy a new sports coupe for \$41,750, and the finance office at the dealership has quoted you an 8.6 percent APR loan compounded monthly for 48 months to buy the car. What is the effective interest rate on this loan?
A. 8.28 percent
B. 8.41 percent
C. 8.72 percent
D. 8.87 percent
E. 8.95 percent

117. Beginning three months from now, you want to be able to withdraw \$1,500 each quarter from your bank account to cover college expenses over the next 4 years. The account pays 1.25 percent interest per quarter. How much do you need to have in your account today to meet your expense needs over the next 4 years?
A. \$21,630.44
B. \$21,847.15
C. \$22,068.00
D. \$22,454.09
E. \$22,711.18

118. You are planning to save for retirement over the next 15 years. To do this, you will invest \$1,100 a month in a stock account and \$500 a month in a bond account. The return on the stock account is expected to be 7 percent, and the bond account will pay 4 percent. When you retire, you will combine your money into an account with a 5 percent return. How much can you withdraw each month during retirement assuming a 20-year withdrawal period?
A. \$2,636.19
B. \$2,904.11
C. \$3,008.21
D. \$3,113.04
E. \$3,406.97

119. You want to be a millionaire when you retire in 40 years. You can earn an 11 percent annual return. How much more will you have to save each month if you wait 10 years to start saving versus if you start saving at the end of this month?
A. \$79.22
B. \$114.13
C. \$168.47
D. \$201.15
E. \$240.29

120. You have just won the lottery and will receive \$540,000 as your first payment one year from now. You will receive payments for 26 years. The payments will increase in value by 4 percent each year. The appropriate discount rate is 10 percent. What is the present value of your winnings?
A. \$6,221,407
B. \$6,906,372
C. \$7,559,613
D. \$7,811,406
E. \$8,003.11

121. You are preparing to make monthly payments of \$65, beginning at the end of this month, into an account that pays 6 percent interest compounded monthly. How many payments will you have made when your account balance reaches \$9,278?
A. 97
B. 108
C. 119
D. 124
E. 131

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122. You want to borrow \$47,170 from your local bank to buy a new sailboat. You can afford to make monthly payments of \$1,160, but no more. Assume monthly compounding. What is the highest rate you can afford on a 48-month APR loan?
A. 8.38 percent
B. 8.67 percent
C. 8.82 percent
D. 9.01 percent
E. 9.18 percent

123. You need a 25-year, fixed-rate mortgage to buy a new home for \$240,000. Your mortgage bank will lend you the money at a 7.5 percent APR for this 300-month loan, with interest compounded monthly. However, you can only afford monthly payments of \$850, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. What will be the amount of the balloon payment if you are to keep your monthly payments at \$850?
A. \$738,464
B. \$745,316
C. \$767,480
D. \$810,220
E. \$847,315

124. The present value of the following cash flow stream is \$5,933.86 when discounted at 11 percent annually. What is the value of the missing cash flow?

A. \$1,500
B. \$1,750
C. \$2,000
D. \$2,250
E. \$2,500

125. You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the \$2,600,000 purchase price. The monthly

to sell an asset 3 years from now for \$90,000. The asset costs \$71,000 to produce today. At what rate will the firm just break even on this contract?
A. 7.87 percent
B. 8.01 percent
C. 8.23 percent
D. 8.57 percent
E. 8.90 percent

payment on this loan will be \$11,000. What is the effective annual rate on this loan?
A. 4.98 percent
B. 5.25 percent
C. 5.46 percent
D. 6.01 percent
E. 6.50 percent

126. Consider a firm with a contract
127. What is the present value of \$1,100 per year, at a discount rate of 10 percent if the first payment is received 6 years from now and the last payment is received 28 years from now?
A. \$6,067.36
B. \$6,138.87
C. \$6,333.33
D. \$6,420.12
E. \$6,511.08

128. You have your choice of two investment accounts. Investment A is a 5-year annuity that features end-of-month \$2,500 payments and has an interest rate of 11.5 percent compounded monthly. Investment B is a 10.5 percent continuously compounded lump sum investment, also good for five years. How much would you need to invest in B today for it to be worth as much as investment A five years from now?
A. \$108,206.67
B. \$119,176.06
C. \$124,318.08
D. \$129,407.17
E. \$131,008.15

B. \$1,053.87
C. \$1,058.01
D. \$1,063.30
E. \$1,072.11

129. Given an interest rate of 8 percent per year, what is the value at date t = 9 of a perpetual stream of \$500 annual payments that begins at date t = 17?
A. \$3,646.81
B. \$4,109.19
C. \$4,307.78
D. \$6,250.00
E. \$6,487.17

130. You want to buy a new sports car for \$55,000. The contract is in the form of a 60-month annuity due at a 6 percent APR, compounded monthly. What will your monthly payment be?
A. \$1,047.90

131. You are looking at a one-year loan of \$10,000. The interest rate is quoted as 10 percent plus 5 points. A point on a loan is simply 1 percent (one percentage point) of the loan amount. Quotes similar to this one are very common with home mortgages. The interest rate quotation in this example requires the borrower to pay 5 points to the lender up front and repay the loan later with 10 percent interest. What is the actual rate you are paying on this loan?
A. 15.00 percent
B. 15.47 percent
C. 15.55 percent
D. 15.79 percent
E. 15.84 percent

132. Your holiday ski vacation was great, but it unfortunately ran a bit over budget. All is not lost. You just received an offer in the mail to transfer your \$5,000 balance from your current credit card, which charges an annual rate of 18.7 percent, to a new credit card charging a rate of 9.4 percent. You plan to make payments of \$510 a month on this debt. How many less payments will you have to make to pay off this debt if you transfer the balance to the new card?
A. 0.36 payments
B. 0.48 payments
C. 1.10 payments
D. 1.23 payments
E. 2.49 payments

57. Miller Brothers Hardware paid an annual dividend of \$1.15 per share last month. Today, the company announced that future dividends will be increasing by 2.6 percent annually. If you require a 12 percent rate of return, how much are you willing to pay to purchase one share of this stock today?
A. \$12.23
B. \$12.55
C. \$12.67
D. \$12.72
E. \$12.88

58. Sessler Manufacturers made two announcements concerning its common stock today. First, the company announced that the next annual dividend will be \$1.75 a share. Secondly, all dividends after that will decrease by 1.5 percent annually. What is the maximum amount you should pay to purchase a share of this stock today if you require a 14 percent rate of return?
A. \$11.29
B. \$12.64
C. \$13.27
D. \$14.00
E. \$14.21

59. How much are you willing to pay for one share of Jumbo Trout stock if the company just paid a \$0.70 annual dividend, the dividends increase by 1.6 percent annually, and you require a 10 percent rate of return?
A. \$8.29
B. \$8.33
C. \$8.47
D. \$8.53
E. \$8.59

60. Free Motion Enterprises paid a \$2.20 per share annual dividend last week. Dividends are expected to increase by 3.75 percent annually. What is one share of this stock worth to you today if your required rate of return is 15 percent?
A. \$19.06
B. \$19.30
C. \$19.56
D. \$20.29
E. \$20.59

61. Upper Crust Bakers just paid an annual dividend of \$2.80 a share and is expected to increase that amount by 4 percent per year. If you are planning to buy 1,000 shares of this

B. \$14.01
C. \$14.56
D. \$14.79
E. \$15.23

stock next year, how much should you expect to pay per share if the market rate of return for this type of security is 11.50 percent at the time of your purchase?
A. \$37.33
B. \$38.16
C. \$38.83
D. \$40.38
E. \$42.00

62. The common stock of Textile Mills pays an annual dividend of \$1.65 a share. The company has promised to maintain a constant dividend even though economic times are tough. How much are you willing to pay for one share of this stock if you want to earn a 12 percent annual return?
A. \$13.75

Tutorials for this Question
1. ## Solution: finance data bank

Tutorial # 00005088 Posted By: spqr Posted on: 12/13/2013 02:30 PM
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\$540,000 as your first payment one year from now. You will ...
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