Koopman's Chickens, Inc. plans to borrow $275,000 from its bank for one year. The rate of interest is 9 percent, but a compensating balance of 20 percent is required. What is the effective rate of interest? Answer Less than 11.4 percent More than 11.4 percent, but less than 11.6 percent More than 11.6 percent, but less than 11.8 percent More than 11.8 percent 10 points Question 2

Sara would like to evaluate the performance of her portfolio over the past 10 years. What compound annual rate of return has she achieved if she invested $12,000 10 years ago and now has $25,000? Answer Between 8% and 9% Between 10% and 11% Between 9% and 10% Between 7% and 8% 10 points Question 3

Mr. Nailor invests $5,000 in a money market account at his local bank. He receives annual interest of 8% for 7 years. How much return will his investment earn during this time period? Answer $2,915 $3,570 $6,254 $8,570 10 points Question 4

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today? Answer Present value of an annuity of $1 Future value of an annuity Present value of $1 Future value of $1 10 points Question 5

Babe Ruth Jr. has agreed to play for the Cleveland Indians for $3 million per year for the next 10 years. What table would you use to calculate the value of this contract in today's dollars? Answer Present value of an annuity Present value of a single amount Future value of an annuity None of these 10 points Question 6

Gary Kiraly wants to buy a new Italian sports car in three years. The vehicle is expected to cost $80,000 at that time. If Gary should be so lucky as to find an investment yielding 12% over that three-year period, how much would he have to invest now in order to accumulate $80,000 at the end of the three years? Answer $56,960 $59,960 $62,960 $66,960 10 points Question 7

Pedro Gonzalez will invest $5,000 at the beginning of each year for the next 9 years. The interest rate is 8 percent. What is the future value? Answer $58,471 $62,440 $67,435 $72,435 10 points Question 8

If you invest $10,000 at 10% interest, how much will you have in 10 years? Answer $13,860 $25,940 $3,860 $80,712 10 points Question 9

After 10 years, 100 shares of stock originally purchased for $500 was sold for $900. What was the yield on the investment? Choose the closest answer. Answer 19% 2.5% 8.5% 6% 10 points Question 10

As the interest rate increases, the present value of an amount to be received at the end of a fixed period: Answer increases. decreases. remains the same. Not enough information to tell.