Find equivalent present worth of future cash flow generated – Microeconomics
1.) You have borrowed $25,000 at an annual interest rate (r) of 8% compounded quarterly. Equal payment will be made every quarter over a five-year period. (The first payment will be made at the end of the first quarter.) What will the quarterly payment be?<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />
A) A=$25,000(A/P,8%,5)
B) A=$25,000(A/P,2%,20)
C) A=$25,000(A/P,8%,10)
D) A=$25,000(A/P,2.013%,20)
E) None
2.) You have borrowed $25,000 at an annual interest rate (r) of 8% compounded monthly. Equal payment will be made every quarter over a five-year period. (The first payment will be made at the end of the first quarter.) What is the quarterly interest rate (effective interest rate per quarter)?
A) i=8.24%
B) i=8.30%
C) i=2.000%
D) i=2.013%
E) None
3.) You have borrowed $25,000 at an annual interest rate (r) of 9% compounded monthly. Equal payment will be made every quarter over a five-year period. (The first payment will be made at the end of the first quarter.) What is the annual effective interest rate (effective interest rate per year)?
A) i= 2.25%
B) i= 2.27%
C) i=9.38%
D) i=9.31%
E) None
4.) You have borrowed $25,000 at an annual interest rate (r) of 9% compounded monthly. Equal payment will be made every 6 months over a five-year period. (The first payment will be made at the end of the first quarter.) What will the semi-yearly payment be?
A) A=$25,000(A/P,0.75%,60)
B) A=$25,000(A/P,4.59%,10)
C) A) A=$25,000(A/P,9.38%,5)
D) All of the above
E) none of the above
5.) How long will it take an investment to double if the interest rate is 6% compounded quarterly?
A) N=11.64years
B) N=3.88years
C) N=3.68years
D) N=13.48years
E) None of the above
6.) As a series of equal payments of $8,000 for 15 years is equivalent to what present amount at an interest rate of 6% compounded quarterly?
A) P=$314,434.53
B) P=$163,129.00
C) P=$315,042.15
D) P=$314,485.51
E) None
7.) You are making $1,000 quarterly deposits into a fund that pays interest at a rate of 6% compounded quarterly. What would be the balance at the end of 10 years?
A) F=$145,853.22
B) F=$54,267.89
C) F=$54,354.22
D) F=$154,761.97
E) None of the above
8.) You are making $1,000 quarterly deposits into a fund that pays interest at a rate of 6% compounded monthly. What would be the balance at the end of 10 years?
A) F=$154,761.97
B) F=$145,853.22
C) F=$54,267.89
D) F=$54,354.22
E) None of the above
9.) If $500 is deposited into a saving account at the beginning of each quarter for 8 years and the account earns 6% interest rate compounded quarterly, what will be the balance at the end of 8 years?
A) F=$20,344.14
B) F=$30,201.22
C) F=$20,649.31
D) F=$31,421.56
E) None of the above
10.) A house is priced at $125,000. If a down payment of $25,000 is made and the loan is going to be repaid in 15 years. The annual interest rate is 6.25%. What is the monthly payment for this purchase?
A) A=$957.42
B) A=$857.42
C) A=$757.42
D) A=$657.42
E) None of the above
11.) A house is priced at $125,000. If a down payment of $25,000 is made and the loan is going to be repaid in 15 years. The annual interest rate is 6.25%. What is the principle balance at the end of first year for this purchase?
A) $95,849.38
B) $95,749.38
C) $97,649.38
D) $95,843.19
E) None of the above
12.) A house is priced at $125,000. If a down payment of $25,000 is made and the loan is going to be repaid in 15 years. The annual interest rate is 6.25%. Between which months the principle payment and the interest payment will be equal?
A) Between month 37 and 38
B) Between month 43 and 44
C) Between month 47 and 48
D) Between month 57 and 58
E) None of the above
13.) James Hogan is purchasing a $24,000 automobile, which is to be paid for in 48 monthly installment of $563.65.What is the monthly interest rate for this financing arrangement?
A) i= 0.5% monthly
B) i= 0.45% monthly
C) i= 0.35% monthly
D) i= 0.25% monthly
E) None of the above
14.) James Hogan is purchasing a $24,000 automobile, which is to be paid for in 48 monthly installment of $563.65. What effective annual interest rate is for this financing arrangement?
A) i= 3.17% yearly
B) i= 4.17% yearly
C) i= 5.17% yearly
D) i= 6.17% yearly
E) None of the above
15.) James Hogan is purchasing a $24,000 automobile, which is to be paid for in 48 monthly installment of $563.65. What nominal annual interest rate is for this financing arrangement?
A) i= 3.17% yearly
B)i= 4.17% yearly
C)i= 5.17% yearly
D)i= 6.17% yearly
E)None of the above
16.) A couple is planning to finance its five-year-old son’s college education. Money can be deposited to an account at 5% annual rate compounded monthly. What monthly deposit must be made from the son’s 6th birthday to his 18th birthday to obtain a sum of $185,866.50?
A) A=$957.42
B) A=$857.42
C) A=$944.62
D A=$898.64
17.) 16.) A couple is planning to finance its five-year-old son’s college education. Money can be deposited to an account at 5% annual rate compounded monthly. If a monthly deposit of $857.42 is going to be made from the son’s 6th birthday to his 18th birthday, and if four withdraws will be made on each birthday from 18th to 21st (Note that the last deposit is made on the date of the first withdrawal.) What amount of money can be expected at each withdraw?
A) $50,000
B) $48,000
C) $46,000
D) $52,000
E) None of the above
18.) A chemical production facility that is under construction is expected to be in full commercial operation one year from now. Once full operation, the facility will generate $6,000 cash profit daily over the plants service life of 5 years. Determine the equivalent present worth of the future cash flows generated by the facility at the beginning of commercial operation, assuming 8% interest compounded daily, with the daily flows.
A) P=$9,314,434.53
B) P=$9,163,129.00
C) P=$9,024,184.46
D) P=$9,314,485.51
E) None of the above
19.) A chemical production facility that is under construction is expected to be in full commercial operation one year from now. Once full operation, the facility will generate $85,000 cash profit daily over the plants service life of 8 years. Determine the equivalent present worth of the future cash flows generated by the facility at the beginning of commercial operation, assuming 12% interest compounded continuously, with the daily flow series approximated by a uniform continuous cash flow function.
A)P=$9,314,434.53
B)P=$9,163,129.00
C)P=$9,024,184.46
D)P=$9,314,485.51
E)None of the above
20.) What is the future value of “an example of linear gradient series (Find P)?”
A)$265.22
B)$365.22
C)$465.22
D)$565.22
