Question

Mimi makes a payment of $3,100 a year on her car. At the end of 10 years, she’s paid off her initial $20,000 loan. What was her approximate interest rate?

6.10%

8.88%

7.94%

20.56%

7.73%

Eddie plans on retiring in 20 years by purchasing a house on the coast. He estimates he will need $1,500,000 saved at that time and is starting now. What payment would Eddie need to make yearly into a savings account with a tax-rate of 35% and an average market return of 7.0%?

$47,564

$16,404

$31,440

$12,254

$36,000

Diane took out a $400,000 home mortgage with 4.0% interest rate and equal annual payments. How much will she have to pay annually to repay the loan in 20 years?

$29,433

$24,785

$24,600

$20,616

$18,667

JoePa Industries recently bought a new plant for $15 million and expects cash flows generated from the investment in the next four years to be: $10 million, $12 million, $15 million, and $10 million. Using a discount rate of 8.0%, calculate the company’s NPV (rounded to the nearest million).

$33 million

$24 million

$44 million

$14 million

$13 million

Initech invests in a new plant for $150,000. The investment is expected to generate cash flows in the next 3 years of: $55,000, $75,000, and $95,000. Calculate the IRR of the project.

12.0%

19.5%

21.1%

15.6%

4.0%

Answer 1

10 NPER = number of a payment periods payments = pmt = pv = initial amount rate per period = rate $3,100.00 $20,000.00 8.88% RATE(10,3100,-20000,) rate(nper,pmt,-pv,)