1998 WordsOct 29, 20138 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

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