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FINC 330 - Midterm Examination   PMT (non-annually)   Question 1     A commercial bank will loan you $46,523 for 8 years to buy a car

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FINC 330 - Midterm Examination

PMT (non-annually)

 

Question 1

A commercial bank will loan you $46,523 for 8 years to buy a car. The loan must be repaid in equal monthly payments at the end of the month. The annual interest rate on the loan is 16.35 percent of the unpaid balance. What is the amount of the monthly payments?

Round the answer to two decimal places.

Question 2

To what amount will the following investment accumulate?
 $34,395, invested today for 40 years at 11.25 percent, compounded monthly.

Round the answer to two decimal places.

Question 3

What is the accumulated sum of the following stream of payments?
$2,741 every year at the end of the year for 11 years at 7.44 percent, compounded annually.

Round the answer to two decimal places.

Question 4

What is the present value of a $675 perpetuity discounted back to the present at 14.94 percent.

The answer should be calculated to two decimal places.

Question 5

What is the future value in 26 years of an ordinary annuity cash flow of $1,879 every quarter of a year at the end of the period, at an annual interest rate of 7.65 percent per year, compounded quarterly?

Round the answer to two decimal places.

Question 6

A car dealership offers you no money down on a new car. You may pay for the car for 4 years by equal monthly end-of-the-month payments of $485 each, with the first payment to be made one month from today. If the discount annual rate is 11.92 percent compounded monthly, what is the present value of the car payments?

Round the answer to two decimal places.

 

Question 7

Assume that the inflation rate during the last year was 1.58 percent. US government T-bills had the nominal rates of return of 3.98 percent. What is the real rate of return for a T-bill?

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

Question 8

Bright Star Bank pays a nominal annual (quoted) interest rate of 10.19 percent, compounded quarterly on your savings account. Calculate the effective annual rate, or EAR (annual percentage yield).

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

Question 9

Your mother has been working in a small bookstore for many years. Her sales in the first year were $38,347, and her sales in the last year were $71,629. If the sales grew at an average rate of 6.44 percent per year, how many years did your mother sell books in her bookstore?

Round the answer to two decimal places.

Question 10

Big Brothers, Inc. borrows $408,546 from the bank at 9.35 percent per year, compounded annually, to purchase new machinery. This loan is to be repaid in equal annual installments at the end of each year over the next 4 years. How much will each annual payment be?

Round the answer to two decimal places.

Question 11

You have just received an endowment and placed this money in a savings account at an annual rate of 11.55 percent. You are going to withdraw the following cash flows for the next five years. 

End of year
1.   $4,810
2.   $9,770
3.   $5,868
4.   $4,454
5.   $10,647

How much is the endowment that you received?

Round the answer to two decimal places.

Question 12

What is the present value of the following future amount?
$342,167, to be received 7 years from now, discounted back to the present at 15.71 percent, compounded daily.

Round the answer to two decimal places.

Question 13

A firm's dividends have grown over the last several years. 7 years ago the firm paid a dividend of $1. Yesterday it paid a dividend of $3. What was the average annual growth rate of dividends for this firm?

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

Question 14

You placed $5,210 in a savings account today that earns an annual interest rate of 3 percent compounded annually. How much you will have in this account at the end of 29 years? Assume that all interest received at the end of the year is reinvested the next year.

Round the answer to two decimal places.

Question 15

If you want to have $223,013 in 14 years, how much money should you put in a savings account today? Assume that the savings account pays you 4.0 percent and it is compounded annually. Round the answer to two decimal places

 

Question 16

What is the accumulated sum of the following stream of payments?
$26,240 every year at the beginning of the year for 14 years, at 6.21 percent, compounded annually.

Round the answer to two decimal places.

Question 17

You have been offered the opportunity to invest in a project that will pay $5,475 per year at the end of years one through three and $6,085 per year at the end of years four and five. These cash flows will be placed in a saving account that pays 12.03 percent per year. What is the future value of this cash flow pattern at the end of year five?

Round the answer to two decimal places.

Question 18

You have accumulated some money for your retirement. You are going to withdraw $84,890 every year at the end of the year for the next 18 years. How much money have you accumulated for your retirement? Your account pays you 6.29 percent per year, compounded annually. To answer this question, you have to find the present value of these cash flows.

Round the answer to two decimal places.