# fin300 practice

1998 Words8 Pages
1. Poor Dog, Inc. borrowed \$135,000 from the bank today. They must repay this money over the next six years by making monthly payments of \$2,215.10. What is the interest rate on the loan? Express your answer with annual compounding. A) 5.98% B) 6.63% C) 4.71% D) 5.65% E) 5.80% 2. How much would you pay for a security that pays you \$500 every 4 months for the next 10 years if you require a return of 8% per year compounded monthly? A) \$11,228.48 B) \$15,000.00 C) \$10,260.00 D) \$13,724.90 E) \$10,200.23 3. You can earn 5% per year compounded annually for the next 4 years, followed by 8% per year compounded quarterly for 5 years. What is the average annual compounded rate of return over the 9 year period?…show more content…
Assuming that you had agreed to charge him 10% per year compounded annually, and assuming that he wishes to make five equal annual payments beginning in one year, how much would your brother-in-law have to pay you annually in order to pay off the debt? (Assume that the loan continues to accrue interest at 10% per year.) A) \$738.63 B) \$798.24 C) \$772.45 D) \$697.43 E) \$751.46 12. What information to you need to find the 3 year forward rate starting 2 years from now? A) 2 and 5 year zero coupon spot rates B) 3-year zero coupon spot rate C) 2 and 3 year zero coupon spot rates D) 5 year zero coupon spot rate E) 3 and 5 year zero coupon spot rates 13. You have been making payments for the last 25 years and have finally paid off your mortgage. Your original mortgage was for \$345,000 and the interest rate was 5% per year compounded semi-annually for the entire 25 year period. How much interest have you paid over the last 5 years of the mortgage? A) B) \$120,392.23 C) \$13,931.87 D) \$80,743.13 E) \$106,460.37 14. Which of the following is (are) sources of cash? I. an increase in accounts receivable II. a decrease in common stock III. an increase in long-term debt IV. a decrease in accounts payable A) I, II, and IV only B) II and IV only C) I only D) III only E) I and III only 15. Financial planning allows firms to: I. avoid future