Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Please help solve 21-30
Transcribed Image Text:27. The future value of an investment of $6,725 today earns 4.85% compunded quarterly for twelve
years will be closest to:
A) $11,871.72
B) $10,378.19
C) $36,996.10
28. You've been offered monthly payments of $625 for the next eight years and you expect to earn
4.75% annually. The value of these cash flows today is closest to:
A) $4,080.65
B) $8,239.31
C) $49,835.59
29. Over the life of a 15 year mortgage for $187,500 at 4.15%, total interest paid is closest to:
A) $135,470.45
B) $68,119.69
C) $64,689.20
30. The future value of $7,300 invested for 12 years at 2.15% is closest to:
A) $5,655.39
B) $9,435.67
C) $9,422.87
Transcribed Image Text:21. Primus Bank offers two mortgage loan options, both 15 years, one with monthly payments and one
with payments every two weeks. For a mortgage of $225,000 at 3.85%, which option results in the
lowest interest paid?
A) Interest paid is the same for both options.
B) The bi-weekly option.
C) The monthly option.
22. Which of the following is not a benefit of the corporate form of business?
A) Easy to form.
B) Limited liability.
C) Easy to raise capital.
23. Farro Industries sold 3.35 million Starlight NightLights last year and sales have been growing at
3.3% per quarter. At this growth rate, how long will it take for sales of Starlight NightLights to double?
A) 5.27 years.
B) 21.10years.
C) 5.34 years.
24. A local financial institution is offering five year certificates of deposit with a stated rate of 10.50%
and monthly compounding. The effective rate of the investment is closest to:
A) 11.02%
B) 11.06%
C) 10.97%
25. A business created as a distinct legal entity composed of one or more individuals or entities is called
a:
A) corporation.
B) sole proprietorship.
C) partnership.
26. Which of the following statements concerning interest rates is correct?
A) The stated rate is the same as the effective annual rate.
B) An effective annual rate is the rate that applies if interest were charged annually.
C) Banks prefer more frequent compounding on their savings accounts.
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