Rate of return comet expects to earn from equipment

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Reference no: EM131899851

1. How much must be invested today to have $1,000 in two years if the interest rate is 5%?

a.$909.09

b.$900.00

c.$907.00

d.$950.00

2. If Susan and Joe set aside $10,000 for college tuition when their daughter is 13, how much will be available when she starts college at 18 if the account in which the money is deposited pays 12 percent compounded monthly?

a.$17,623.42

b.$18,170.00

c.$16,105.10

d.$16,122.26

3. Comet Powder Company has purchased a piece of equipment costing $100,000. It is expected to generate a 10-year stream of benefits amounting to $16,273 per year. Determine the rate of return Comet expects to earn from this equipment.

a.16.3%

b.62.7%

c.10%

d.20%

4. Columbia Bank & Trust has just given you a $20,000 term loan to pay for a new concrete mixer. The loan requires five equal annual (end of year) payments. If the loan provides the bank with a 12 percent return, what will be your annual payments?

a.$5,547.85

b.$3,148.12

c.$6,000.00

d.$1,666.67

5. Each year a company is required to place money into a bank account to retire its bond's principal at maturity. If the bond's principal is $10 million, and bank interest is estimated at 8%, how much are the annual payments if they are to be made over the last 20 years of the bond's life?

a.$101,853

b.$218,522

c.$462,950

d.$425,387

Reference no: EM131899851

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