Multiple choice

1)  What is the effective interest rate per payment, for payments that occur once every six months, when the interest rate is an annual 20% that is compounded weekly?

a.  20%/26

b.  (1+20%/52)26-1 

c.  (1+20%/52)52-1 

d. (1+20%/26)26-1

2)  You have made an investment that pays you $2,000 at the end of the first year, and then decreases by 9% each year for 4 more years (5years total). What is the FUTURE worth of this investment? (interest rate = 9%).

a. $10,162

b. $11,027

c. $11,047

d. $6,605

3)  You receive a $1,100 cash flow at Present which will repeat itself every THREE years to infinity. Assuming an annual interest rate of 10%, what would be the Capitalized Equivalent (CE)?

a. $5,055

b. $4,423

c. $4,884

d. $4,261

4)  You took a $5,000 48-month car loan with 10% nominal annual interest rate. How much money do you still owe after the 23rd  payment? (Assume monthly compounding on your interest rate and equal monthly payment).

a. $2616.81

b. $2753.12

c. $2833.69

d. $2851.20