Calculate the total amount of interest you will pay the bank

Question 1. How much must be invested today to have \$1,000 in two years if the interest rate is 5%?

a.    \$909.09
b.    \$900.00
c.    \$907.00
d.    \$950.00

Question 2. Find the present value of \$100 to be received at the end of two years if the discount rate is 12% compounded monthly.

a.    \$66.50
b.    \$78.76
c.    \$68.80
d.    \$91.80
e.    \$79.75

Question 3. What is the most you should pay to receive the following cash flows if you require a return of 12 percent?

Year 1    \$5,000
Year 2    \$8,000
Year 3    \$12,000
Year 4-10    \$15,000

a.    \$58,580
b.    \$104,135
c.    \$68,105
d.    none of the above

Question 4. Find the future value in two years of \$100 that is deposited in an account, which pays 12%, compounded monthly.

a.    \$160.00
b.    \$112.70
c.    \$118.80
d.    \$125.40
e.    \$126.97

Question 5. You have borrowed \$180,000 to buy a new home. You plan to make monthly payments over a 25-year period. The bank has offered you a 10% interest rate compounded monthly. Calculate the total amount of interest you will pay the bank over the life of the loan.

a.    \$301,499
b.    \$307,541
c.    \$310,545
d.    \$319,766

Question 6. You have borrowed \$130,000 to buy a new motor home. Your loan is to be repaid over 15 years at 8% compounded monthly If you pay an extra \$200 per month on the motor home, how many years will it take to pay off the loan?

a.    10.3 years
b.    11. 5 years
c.    12.8 years
d.    13.3 years

Question 7. A perpetuity has a cash flow of \$20 and a discount rate of 10%. What is the value of the perpetuity?

a.    \$22
b.    \$500
c.    \$200
d.    none of the above

Question 8. Keith Stone has a 10-year-old daughter, Kate, who will be entering college in 8 years. Keith estimates college costs to be \$16,000, \$17,000, \$18,000 and \$19,000 payable at the beginning of each of Kate's four years in college. How much must Keith save each year (assume end of year payments) for each of the next 8 years to have enough savings to pay for Kate's education when she starts college? Assume Keith can earn 9% on his savings.

a.    \$5,569
b.    \$7,720
c.    \$5,108
d.    \$7,677

Question 9. Calculate the amount to be received at the end of year 1 that is equivalent to \$150 at the end of year 1, \$450 at the end of year 2, and \$300 at the end of year 3, given a discount rate of 10%.

a.    \$807
b.    \$817
c.    \$887
d.    \$975
e.    \$1,331

Question 10. You are considering an investment that will pay you \$100 in Year 1, \$500 in Year 2, \$0 in Year 3 and \$600 in Year 4. If you require a 12% return, what is the most you should pay for this investment today? (Round to nearest \$)

a.    \$915
b.    \$869
c.    \$734
d.    \$698

#### Solution Preview :

##### Reference No:- TGS01799278

Now Priced at \$20 (50% Discount)

Recommended (96%)

Rated (4.8/5)