1.If an investment offers a cost of $75 today and promises a $4 payment every ye

Question

1.If an investment offers a cost of $75 today and promises a $4 payment every year forever, what is the interest rate that it offers?

4.0 percent

5.3 percent

7.5 percent

18.75 percent

2.What are the monthly payments (principal and interest) of a home mortgage of 15 years for a $120,000 loan when interest rates are fixed at 3.2 percent APR?

$579.84

$518.96

$893.65

$840.29

3.A car dealer is advertising a loan with monthly payments and a 5.9% APR. What is the loan's EAR?

5.9 percent

5.12 percent

6.06 percent

6.03 percent

4.What is the present value of annual $250 payments made for the next 15 years if interest rates are 11%?

$1,551.22

$3,595.43

$775.61

$1,797.72

4.0 percent

5.3 percent

7.5 percent

18.75 percent

Explanation / Answer

1

4/75

5.3 %

2

$840.29

3

5.9 percent

4

$1,551.22

,

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