6) Your department at work places $10,000 every year-end into an account earning

Question

6) Your department at work places $10,000 every year-end into an account earning 5%. The money is used when the corporate office fails to fully finance your profitable projects. The money has not been touched since a first deposit was made exactly six years ago. If the most recent deposit was made today, how much money is currently in the account?
A) $55,256.31 B) $68,019.13 C) $81,420.08 D) $60,000

7) If you borrow $50,000 at an annual interest rate of 12% for ten years, what is the annual payment (prior to maturity) on a fully amortized loan?
A) $12,161.29 B) $6,000.00 C) $8,849.21 D) $0.00

8) The Cougar Corporation has issued 20-year semi-annual coupon bonds with a face value of $1,000. If the annual coupon rate is 10% and the current yield to maturity is 14%, what is the firm's current price per bond?
A) $735.07 B) $849.54 C) $850.61 D) $733.37

9) Your parents have an investment portfolio of $400,000, and they wish to take out cash flows of $50,000 per year as an ordinary annuity. How long will their portfolio last if the portfolio is invested at an annual rate of 4.90%? Use a calculator to determine your answer.
A) 10.14 years B) 8.00 years C) 9.10 years D) 10.4 years

10) Johnson Construction Inc. has issued 20-year $1,000 face value, 17% annual coupon bonds, with a yield to maturity of 11%. The current price of the bond is ________.
A) $681.47 B) $1,000.00 C) $1,477.80 D) There is not enough information to answer this question.

Explanation / Answer

6-A) $55,256.31

7-B) $6,000.00

8- D) $733.37

9-C) 9.10 years

10-A) $681.47

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