FIN 3320 Exam 2
Suppose United Bank offers to lend you $10,000 for one year at a nominal annual rate
of 8.00%, but you must make interest payments at the end of each quarter and then pay
off the $10,000 principal amount at the end of the year. What is the effective annual rate
on the loan?
a 8.24%
b 8.45%
c 8.66%
d 8.88%
e 9.10%
You sold a car and accepted a note with the following cash flow stream as your
payment. The effective price you received for the car assuming an interest rate of 6.0%
is closest to:
Years: 0 1 2 3 4
CFs: 0 1k 2k 2k 2k
a 5,987
b 6,286
c 6,000
d 6,930
e 7,277
Last year Tempe Corporation's sales were $525 million. If sales grow at 7.5% per year,
how large (in millions) will they be 8 years later?
a 845.03
b 889.51
c 936.33
d 983.14
e 1,032.30
Your father paid $10,000 (CF at t = 0) for an investment that promises to pay $750 at
the end of each of the next 5 years, then an additional lump sum payment of $10,000 at
the end of the 5th year. What is the expected rate of return on this investment?
a 6.77%
b 7.13%
c 7.50%
d 7.88%
e 8.27%