Monthly compounding How much would you have to invest today at 12% annual interest, compounded monthly, in

Question # 00004994 Posted By: vikas Updated on: 12/09/2013 01:01 AM Due on: 12/31/2013
Subject Accounting Topic Accounting Tutorials:
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(Monthly compounding) How much would you have to invest today at 12% annual interest, compounded monthly, in order to end up with $1,000 in your investment account at the end of 12 months?


$887.45


$892.86


$256.68


$990.10



Question 2 (Annualizing a rate) The effective annual rate (EAR) of 1% interest per month is:
(Annualizing a rate) The effective annual rate (EAR) of 1% interest per month is:


12%


12.68%


1%


Not enough information to determine



Flag this Question Question 3


(Annualizing a rate) Your bank advertises 12 month CDs with a stated annual interest rate of 12%, compounded monthly. What is the effective annual rate (EAR) on the CD?




(Annualizing a rate) Your bank advertises 12 month CDs with a stated annual interest rate of 12%, compounded monthly. What is the effective annual rate (EAR) on the CD?


1%


12%


12.68%


144%



Flag this Question Question 4 2 pts Skip to question text. (PV of annuity due) You are in charge of a new Missouri State Lottery. The lottery rules say that winners are to be paid $10 million in the form of 10 annual payments of $1 million each. Assuming that the interest rate is 10% and the payments are to be made at the beginning of each of the next 10 years, how much money does your lottery organization have to deposit in an account today in order to make the required payments to a lottery winner?


$10,000,000


$6,759,024


$6,144,567


$9,090,909



Flag this Question Question 5 2 pts (Rate of return of annuity) If the Bank of America agreed to lend you $50,000 for 10 years in return for 10 annual payments of $7,791 (each payment due at the end of each year), what annual percent rate of interest are you being charged?
(Rate of return of annuity) If the Bank of America agreed to lend you $50,000 for 10 years in return for 10 annual payments of $7,791 (each payment due at the end of each year), what annual percent rate of interest are you being charged?


about 20%


about 16%


about 9%


5.4%



Flag this Question Question 6 2 pts (Rate of return of annuity) Joe's Dockyard is financing a new boat with an amortizing loan of $24,000 which is to be repaid in 10 annual installments of $4,247.62 each. What annual interest rate is Joe paying on the loan?
(Rate of return of annuity) Joe's Dockyard is financing a new boat with an amortizing loan of $24,000 which is to be repaid in 10 annual installments of $4,247.62 each. What annual interest rate is Joe paying on the loan?


18.9%


17.7%


14.0%


12.0%



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Question 7 2 pts (Loan payments) Tom's Toyotas has a 2004 4 Runner on sale for $16,995. If you could borrow that amount from Tom's Credit Union at 7% for 4 years, what would be your monthly loan payments?
(Loan payments) Tom's Toyotas has a 2004 4 Runner on sale for $16,995. If you could borrow that amount from Tom's Credit Union at 7% for 4 years, what would be your monthly loan payments? $232.30 $378.85 $406.97 $5,017.40



Flag this Question Question 8 2 pts


(PV of a perpetuity) The PV of an endless stream of annual payments (the payments in the stream continue to be paid forever) of $1,200 each to an investor with a required rate of return of 10% is:
(PV of a perpetuity) The PV of an endless stream of annual payments (the payments in the stream continue to be paid forever) of $1,200 each to an investor with a required rate of return of 10% is: $1,000


$1,200


$12,000


$10,000



Flag this Question Question 9 2 pts (FV of an uneven cash flow stream) What's the future value (FV) of the following cash flow stream: (discount rate = 10%) Year Cash Flow 1 100 2 200 3 300
(FV of an uneven cash flow stream) What's the future value (FV) of the following cash flow stream: (discount rate = 10%) Year Cash Flow 1 100 2 200 3 300


$600


$660


$641


$799



Flag this Question Question 10 2 pts (PV of uneven cash flow stream) What's the present value (PV) of the following cash flow stream: (discount rate = 10%) Year Cash Flow 1 100 2 200 3 300
(PV of uneven cash flow stream) What's the present value (PV) of the following cash flow stream: (discount rate = 10%) Year Cash Flow 1 100 2 200 3 300


$451


$482


$545


$600


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Tutorials for this Question
  1. Tutorial # 00004781 Posted By: vikas Posted on: 12/09/2013 01:03 AM
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