1. Assume you wanted to deposit $400 in a savings account today and withdraw the money when the balance reaches $500. Which of the following terms would allow you to withdraw your money the soonest?
a. 7.00% Annual Rate compounded annually
b. 6.90% Annual Rate compounded semi-annually
c. 6.85% Annual Rate compounded monthly
d. 6.75% Annual Rate compounded quarterly
e. 6.80% Annual Rate compounded weekly
f. 6.70% Annual Rate compounded daily
2. The debt position of a company is: 15,000 7 percent coupon bond outstanding, 15 years to maturity, selling for 92 percent of par; the bonds have a $1,000 par value each and make semiannual payments. The tax rate is 35 percent. The after tax cost of debt is:
.0396
.0792
.0515
.0700
None of the above