FINC 3304 Week 5 Quiz | Assignment Help | University of Houston-Victoria
- University of Houston-Victoria / FINC 3304
- 27 Mar 2021
- Price: $5
- Accounting & Economics Assignment Help / Managerial Economics
FINC 3304 Week 5 Quiz | Assignment Help | University of Houston-Victoria
Review Test Submission:
Problems Quiz Ch 5
Question 1
Alfa Life Insurance Co.
is trying to sell you an investment policy that will pay you and your heirs
$10,000 per year forever. If the required return on this investment is 4.75
percent, how much will you pay for the policy?
Question 2
Capstone Investments is
considering a project that will produce cash inflows of $11,000 in year 1,
$24,000 in year 2, and $36,000 in year 3. What is the present value of these
cash inflows if the company assigns the project a discount rate of 12 percent?
Question 3
At the end of this
month, Les will start saving $150 a month for retirement through his company's
retirement plan. His employer will contribute an additional $0.50 for every
$1.00 that he saves. If he is employed by this firm for 30 more years and earns
an average of 10.5 percent on his retirement savings, how much will Les have in
his retirement account 30 years from now?
Question 4
Chandler Tire Co. is
trying to decide which one of two projects it should accept. Both projects have
the same start-up costs. Project 1 will produce annual cash flows of $52,000 a
year for six years. Project 2 will produce cash flows of $48,000 a year for
eight years. The company requires a 15 percent rate of return. Which project
should the company select and why?
Question 5
Today, you are
borrowing $13,800 to purchase a car. What will be your monthly payment amount
if the loan is for four years at 7.5 percent interest?
Question 6
Doris's Fashions has
just signed a $2.2 million contract. The contract calls for a payment of $0.6
million today, $0.8 million one year from today, and $0.8 million two years
from today. What is this contract worth today if the firm can earn 8.2 percent on
its money?
Question 7
The manager of Gloria's
Boutique has approved Carla's application for credit. The maximum payment that
has been approved is $65 a month for 24 months. The APR is 15.7 percent. What
is the maximum initial purchase that Carla can make given this credit approval?
Question 8
Steve is considering
investing $3,600 a year for 40 years. How much will this investment be worth at
the end of the 40 years if he earns an average annual rate of return of 11.6
percent? Assume Steve invests his first payment of the end of this year.
Question 9
What is the effective
annual rate of 6.5 percent compounded quarterly?
Question 10
Billingsley, Inc. is
borrowing $60,000 for five years at an APR of 8 percent. The principal is to be
repaid in equal annual payments over the life of the loan with interest paid
annually. Payments will be made at the end of each year. What is the total
payment due for year 3 of this loan?