Sep / 07

Finance Help. I am so lost!!!!?

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        1. (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. (Points: 3)
        $2613 
        $8690 
        $5740 
        None of the above 


2. (TCO 3) First Choice Bank pays 9% APR compounded quarterly on its business loans. National Emerald Bank pays 13% APR compounded monthly. The EAR for First Choice and National Emerald Bank are: (Points: 3)
        9.31% and 13.80%, respectively 
        9% and 13.80%, respectively 
        9.31% and 13.50%, respectively 
        9% and 13.50%, respectively 


3. (TCO 3) LED Computer Electronics is considering an investment that will have cash flows of $5,000, $6,000, $7,000 and $10,000 for years 1 through 4. What is the approximate value of this investment today if the appropriate discount rate is 9% per year? (Points: 3)
        $22,250 
        $30,520 
        $22,120 
        None of the above 


4. (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: (Points: 4)
        interest rate 
        initial amount of your deposit 
        frequency of the interest payments 
        length of the investment period 


 5. (TCO 3) If you borrow $50,000 today at 10% interest for eight years. How much of your first payment will be applied towards the principal of the loan? (Points: 3)
        $5,000 
        $4,372 
        $4,790 
        zero, all will be applied towards the interest 


6. (TCO 3) Match the following terms with the examples as appropriate: (Points: 5)
 
Matching:

Answer  Potential Matches: 
: Amortized Loan           1: is usually a pure discount loan issued by the US government. 
2: obtained a 5-year loan from your bank to buy a new machine. You will pay $500 per month to cover both interest and principal. 
3: Corporate bonds are usually issued as this form of loans. 
 
: Interest-only Loan           
: Treasury Bill           


7. (TCO 3) You are interested in saving to buy a new machine that costs $1,105. You can deposit $250 in your bank today. If your bank pays 8% annual interest on its accounts, how long will it take you to save for the new machine? (Points: 3)
        about 19 years 
        about 9 years 
        about 4.5 years 
        Can not be determined  


8. (TCO 3) What are some real-life scenarios where you can apply the time value of money? (Points: 6)
Answer