Question 1

Bill just financed a used car through his credit union.His loan requires payments of $275 a month for five years.Assuming that all payments are paid on time,his last payment will pay off the loan in full.What type of loan does Bill have?

Accepted Answer

A)  Amortized
B)  Complex
C)  Pure discount
D)  Lump sum
E)  Interest-onlyF) A) and B)
G) A) and E)

Question 2

McClary Tires just decided to save money each year for the next four years to help fund a new building.If it earns 6.5 percent on its savings,how much will the firm have saved at the end of year 4?

Accepted Answer

A)  $107,525.40
B)  $108,392.69
C)  $111,860.57
D)  $113,200.39
E)  $119,426.41F) B) and D)
G) A) and B)

Question 3

Which of the following will increase the present value of an annuity,all else held constant?
I.Increase in the number of payments
II.Increase in the interest rate
III.Decrease in the interest rate
IV.Decrease in the payment amount

Accepted Answer

A)  I and II only
B)  I and III only
C)  II and IV only
D)  I, II, and IV only
E)  I, III, and IV onlyF) A) and D)
G) B) and C)

Exam 5: Discounted Cash Flow Valuation

McClary Tires just decided to save money each year for the next four years to help fund a new building.If it earns 6.5 percent on its savings,how much will the firm have saved at the end of year 4?

Correct Answer
verified

Which of the following will increase the present value of an annuity,all else held constant? I.Increase in the number of payments II.Increase in the interest rate III.Decrease in the interest rate IV.Decrease in the payment amount

Correct Answer
verified

Bill just financed a used car through his credit union.His loan requires payments of $275 a month for five years.Assuming that all payments are paid on time,his last payment will pay off the loan in full.What type of loan does Bill have?

Correct Answer
verified

Exam 5: Discounted Cash Flow Valuation

McClary Tires just decided to save money each year for the next four years to help fund a new building.If it earns 6.5 percent on its savings,how much will the firm have saved at the end of year 4?

Correct AnswerverifiedShow Answer

Which of the following will increase the present value of an annuity,all else held constant? I.Increase in the number of payments II.Increase in the interest rate III.Decrease in the interest rate IV.Decrease in the payment amount

Correct AnswerverifiedShow Answer

Bill just financed a used car through his credit union.His loan requires payments of $275 a month for five years.Assuming that all payments are paid on time,his last payment will pay off the loan in full.What type of loan does Bill have?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified