BUSN 379 Week 2 ***100% All correct answers***
1. Question : (TCO 3) You have been approved for a $70,000 loan toward the purchase of a new home at 12% interest. The mortgage is for 30 years. How much are the approximately annual payments of the loan? Hint: Assume you pay yearly.
$2613
$8690
$5740
None of the above
Points Received: 3 of 3
Comments:
2. Question : (TCO 3) First Choice Bank pays 9% APR compounded quarterly on its business loans. National Emerald Bank pays 16% APR compounded daily. The EAR for First Choice and National Emerald Bank are:
9.31% and 17.35%, respectively
9% and 17.50%, respectively
9.31% and 17.50%, respectively
9% and 17.35%, respectively
Points Received: 3 of 3
Comments:
3. Question : (TCO 3) Computer Parts, Inc. is considering an investment that will have cash flows of $8,000, $7,000 and $4,000 for years 1 through 3. What is the approximate value of this investment today if the appropriate discount rate is 10% per year?
$24,250
$20,900
$16,060
None of the above
Points Received: 3 of 3
Comments:
4. Question : (TCO 3) You deposited $3,000 in your bank account today. An increase in which of the following will increase the future value of your deposit assuming that all interest is reinvested? Assume the interest rate is a positive value. Select all answers that apply:
interest rate
initial amount of your deposit
frequency of the interest payments
length of the investment period
Points Received: 4 of 4
Comments:
5. Question : (TCO 3) If you borrow $50,000 today at 10% interest for eight years. How much of your second payment will be applied to interest?
$5,000
$4,562
$4,809
can not be determined with the information given
Points Received: 3 of 3
Comments:
6. Question : (TCO 3) Match the following terms with the examples as appropriate:
: Pure discount loan
: Amortized Loan
: Interest-only Loan
: Treasury Bill
Points Received: 4 of 4
Comments:
7. Question : (TCO 3) You are interested in saving to buy a new machine that costs $387,120. You can deposit $32,805 in your bank today. If your bank pays 14% annual interest on its accounts, how long will it take you to save for the new machine?
about 19 years
about 5 years
about 12 years
Can not be determined
Points Received: 4 of 4
Comments:
8. Question : (TCO 3) How can we apply the concept of time value of money in evaluating a mortgage?
Points Received: 6 of 6
Comments:
