BUSN 379 Week 2 Quiz

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BUSN 379 Week 2 Quiz

1.Question :(TCO 3) You have been approved for a $70,000 loan toward the purchase of a new home at 10% interest. The mortgage is for 30 years. How much are the approximately annual payments of the loan? Hint: Assume you pay yearly.
Student Answer: $7425
 None of the above
 2.Question :(TCO 3) First Choice Bank pays 9% APR compounded quarterly on its business loans. National Emerald Bank pays 19% APR compounded semiannually. The EAR for First Choice and National Emerald Bank are:
Student Answer: 9.31% and 19.90%, respectively
 9% and 19.50%, respectively
 9.31% and 19.50%, respectively
 9% and 19.90%, respectively
 3.Question :(TCO 3) ABC Electronics is considering an investment that will have cash flows of $16,000, $5,000 and $4,000 for years 1 through 3. What is the approximate value of this investment today if the appropriate discount rate is 9% per year?
Student Answer: $23,250
 None of the above
 4.Question :(TCO 3) Which of the following will increase the total amount of interest earned on an investment assuming that all interest is reinvested? Select all answers that apply:
Student Answer:increasing the frequency of the interest payments
decreasing the frequency of the interest payments
increasing the interest rate
decreasing the interest rate

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 5.Question :(TCO 3) If you borrow $50,000 today at 10% interest for eight years. How much of your second payment will be applied towards the principal of the loan?
Student Answer: $5,000
 can not be determined with the information given


 6.Question :(TCO 3) Match the following terms with the examples as appropriate:
 7.Question :(TCO 3) You are interested in saving to buy a new machine that costs $1,105. You can deposit $250 in your bank today. If your bank pays 8% annual interest on its accounts, how long will it take you to save for the new machine?
Student Answer: about 19 years
 about 9 years
 about 4.5 years
 Can not be determined
 8.Question :(TCO 3) How can we apply the concept of time value of money in evaluating a mortgage?

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