Purchase Solution

# Time Value of Money

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1. Hayley makes annual end-of-year payments of \$6,260.96 on a five-year loan with an 8 percent interest rate. The original principal amount was

1. \$25,000.
2. \$30,000.
3. \$31,000.
4. \$20,000.

2.Nico makes annual end-of-year payments of \$5,043.71 on a four-year loan with an interest rate of 13 percent. The original principal amount was

1. \$24,462.
2. \$20,175.
3. \$ 3,092.
4. \$15,000.

3.If a United States Savings bond can be purchased for \$29.50 and has a maturity value at the end of 25 years of \$100, what is the annual rate of return on the bond?

1. 5 percent
2. 6 percent
3. 8 percent
4. 7 percent

4.The present value of a \$25,000 perpetuity at a 14 percent discount rate is

1. \$350,000.
2. \$219,298.
3. \$285,000.
4. \$178,571.

5.Jia borrows \$50,000 at 10 percent annually compounded interest to be repaid in four equal annual installments. The actual end-of-year loan payment is

1. \$10,774.
2. \$15,773.
3. \$14,340.
4. \$12,500.

##### Solution Summary

The solution explains some multiple choice questions relating to time value of money

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