REAE Exam 2 - 3325

Find the net present value (NPV) of a project that requires an initial investment of $110,000 and provides cash flows of $13,500 per year for 15 years? The investor's required return is 18.5%.

-42,746.91

What is the NPV of $5,000 year one, $3,000 year 2 and $8,000 year 3, assuming an initial purchase price of $12,000 and discount rate of 9.75%?

1,098.14

Compound interest can be explained as: adding investments to a weak portfolio. None of these adequately explain compound interest. getting paid interest on your interest. the process that causes investments to lose value over time.

getting paid interest on your interest.

According to the lesson, basic investment analysis can be though of as: None of these is correct. a dartboard with random occurrences that cannot be predicted. given the possible receipt of a stated amount at a specific time in the future, you assessed risk and determine an amount that you would feel safe paying today. applying a complex set of derivative formulas to assess statistical outcomes.

given the possible receipt of a stated amount at a specific time in the future, you assessed risk and determine an amount that you would feel safe paying today.

In a typical fixed rate, fully amortized loan, such as a 30 year mortgage, the portion of the payment that is applied to the principal _________ slightly with each payment and the portion of the payment that is applied to interest _________ slightly with each payment. increases, also increases decreases, increases increases, decreases The original statement is misleading since the amounts applied to principal and interest stay the same with every payment.

increases, decreases

What is the APR on a 30 year, $500,000 loan at 4%, plus a half a point?

4.04

What is the APR on a 30 year, $200,000 loan at 4.5%, with no points?

4.5

What is the APR on a 30 year, $200,000 loan at 4.5%, plus two points?

4.67

What is the payment on a 36 month, 2.99% car loan for $15,000?

436.15

What is the monthly loan payment on a 30 year, $100,000 loan at 4.25%?

491.94

What is the APR on a 20 year, $400,000 loan at 5%, plus 3 points?

5.38

What is the present value of the receipt of $1,000 per year for 12 years if the investor's required return is 11%?

6,492.36

What is the future value of $4,900 deposited each year for 14 years in an account earning 2% per year?

78,272.3

Find the internal rate of return (IRR) of a project that requires an initial investment of $110,000 and provides cash flows of $13,500 per year for 15 years? The investor's required return is 18.5%.

8.82

What is the payment on a 72 month, 1.99% car loan for $60,000?

884.76

Find the internal rate of return (IRR) of a project that requires an initial investment of $100,000 and provides cash flows of $14,000 per year for 12 years? The investor's required return is 11%.

9.05

What is the present value of the receipt of $14,000 per year for 12 years if the investor's required return is 11%?

90,892.99

What is the monthly loan payment on a 20 year, $200,000 loan at 4.00%?

1211.96

Given a $200,000 loan, monthly payments, 30 years at 3.75%, how much interest is paid over the life of the loan, assuming no prepayment?

133443.23

What is the IRR of $5,000 year one, $3,000 year 2 and $8,000 year 3, assuming an initial purchase price of $12,000 and discount rate of 9.75%?

14.43

What is the IRR of $50,000 year one, $30,000 year 2 and $80,000 year 3, assuming an initial purchase price of $120,000 and discount rate of 5.75%?

14.43

What is the future value of $4,900 deposited each year for 3 years earning 6% per year?

15,599.64

Given a $200,000 loan, monthly payments, 30 years at 3.75%, what is the balance after 48 months?

184426.34

Given a $200,000 loan, monthly payments, 30 years at 3.75%, how much interest is paid on the 36th payment?

2,267.06 (wrong)

What is the NPV of $50,000 year one, $30,000 year 2 and $80,000 year 3, assuming an initial purchase price of $120,000 and discount rate of 5.75%?

21,754.66

Given current interest rates, it is highly unlikely that the total interest cost on a long term loan such as 30 year mortgage will be any greater than 1/4 of the loan amount. True False

False