Can you answer the questions below Al, Sal, and Hal are triplets. All three deci

Question

Can you answer the questions below

Al, Sal, and Hal are triplets. All three decide to borrow $10,000 so they can each purchase a used vehicle. All three agree to repay their loans in full in one year from an inheritance they will each be receiving. Al borrows his money at 7 percent, compounded monthly. Sal borrows his money at 7 percent, compounded annually. Hal agrees to a loan with 7 percent simple interest. Given this information, which one of the following statements is correct?

Select one:

a. Al, Sal, and Hal will each owe the same amount one year from now.

b. Al will have to repay less money than either Sal or Hal.

c. Hal will owe less money than either Sal or Hal.

d. Sal will have to repay the same amount as Al, but less than Hal.

e. Sal will owe the same amount as Hal, but less than Al.

You are comparing two savings accounts. Account A has an APR of 4.65 percent and an EAR of 4.75 percent. Account B has an APR of 4.70 percent and an EAR of 4.70 percent. Given this, you should invest in account:

Select one:

a. A because it has the higher EAR.

b. A because it has the lower APR.

c. B because it has the lower EAR.

d. B because its APR is equal to its EAR.

e. B because it has the higher APR.

The 7th Street Shop is having a contest to bring attention to its store. It is offering a $2,000 grand prize to one lucky winner. $500 will be paid on the day of the drawing. The remaining $1,500 will be paid in three annual payments of $500 each, starting one year after the drawing. How much is this prize really worth at a 7 percent rate of return?

Select one:

a. $1,812.16

b. $1,693.61

c. $1,438.76

d. $1,948.99

e. $1,122.09

Operating cash flow is equal to:

Select one:

a. Cash flow from assets + Net capital spending + Change in net working capital.

b. Earnings before interest and taxes Depreciation Taxes.

c. Cash flow from assets Change in net working capital + Net capital spending.

d. Earnings before interest and taxes Depreciation + Taxes.

e. Earnings before interest and taxes Change in net working capital Net capital spending.

Explanation / Answer

1. For one year period Compound Interest rate compounded Annually is equal to the Simple Interest. Also, Interest rate compounded monthly will have EAR more than the actual interest rate. Thus, this means, Sal will owe the same amount as Hal, but less than Al, thus, Option E.

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