Prob. 9. Prob. 10. Prob. 11. Prob. 12. Prob. 13. Prob. 14 Fifteen years ago $1000 was deposited in a bank account, and today it is worth $2370. The bank pays interest semi-annually. What was the nominal annual interest rate paid on this account? (A) 2.9%; (B) 4.4%; (C) 5.8%; (D) 6.0% A company puts $25,000 down and will pay $5000 every year for the life of a machine (10 years). If the salvage value is zero and the interest rate is 10% compounded annually, what is the present value of the machine? (A) $54,700 (B) $55.700: (C) $75,500; (D) $82,500 A deposit of $1000 is made in a bank account that pays 8% interest compounded annually. Approximately how much money will be in the account after 10 years? (A) $1,890; (B) $2,000; (C) $2.160: (D) $2,240 At what rate of annual interest will an investment quadruple itself in 12 years? (A) 10.1%; (B) 11.2 % : (C) 12.2 % : (D) 13.1% It costs $75 per year to maintain a cemetery plot. If the interest rate is 6.0%, how much must be set aside to pay for maintenance in each plot without touching the principal? (A) $1150; (B) $1200; (C) $12.50; (D) $1300 With an interest rate of 8% compounded semiannually, the value of a $1000 investment after 5 years is most nearly, (A) $1400; (B) $1470; (C) $1480; (D) $1800 Prob.15 An asset is purchased that costs $9000. It has a 10-year life and a salvage value of $200. Using the straight-line depreciation what is the book value after 3 years. (A) $880; (B) S 6360; (C) 6000; (D) $5640 Prob. 16 Two alternatives have the following cash flows at 5% interest. First Cost P Annual Maintenance A Life in years Salvage Value Case A $8,500 $400 0-3 $300 Case B $14,000 $800 n=6 $500 What is the annual advantage of selecting case B? (a) $4,000; (b) $90; (c)-S110; (d)-$283; (d)- $5,500 Prob. 17. What must be the investment now that will produce an income of $125,000 per year Prob. 18. at an interest rate of 5%? (a) $150,000; (b) $2,500,000; (c) $500,000; (d) $100,000,000; (d) $100,000 A bank offers 1.2% effective monthly interest. What is the effective annual rate with monthly compounding? (a) 7.9%; (b) 8.9%; (c) 14.4 % ; (d) 15.4%