Objective type question on time value of money

Reference no: EM1312444

1. A loan disclosure, as required by law, states that a credit card has an interest rate of 18.2 percent. Interest is compounded on a quarterly basis. What is the effective annual rate?

a) 16.84 percent

b) 16.96 percent

c) 17.08 percent

d) 19.48 percent

e) 19.64 percent

2. What is the present value of $1,200 received at the end of each year for eight years starting in year 4 and ending in year 11 if the discount rate is 10 percent?

a) $3,975.08

b) $4,372.59

c) $4,809.85

d) $6,183.65

e) $6,401.91

3. A preferred stock pays an annual dividend of $5. If you want to earn 11 percent on this investment, what is the maximum amount you should pay to purchase one share of this stock today?

a)$22.73

b) $45.45

c) $66.67

d) $90.91

e) $181.82

Reference no: EM1312444

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