Sf486ffb8dJPG main en( money to buy 20 Big Mac at $4.00 each. If she chooses to

Question

Sf486ffb8dJPG main en( money to buy 20 Big Mac at $4.00 each. If she chooses to invest bher money ne to buy 22 Big Macs next year, what PRECISE or TRUE nominal rabe would Sally hae able to purchase 22 Big Macs nenxt year if she expects the price of Big Macs to go up by 8) Today Sally has enough to earn in order to be 2.5%? D)12,5% A) 12.50% B) 732% 7.50% 9) You take out a $5,000 loan for 5 years at an annual interest rate of 9% and with fbed annual kunpaymnts 5 would be 1.28546 The percent of the first fixed payment that is applied to interest A) 35.0) 64 C) 15.34% ,53t4, a 3 B)665% 10) If an investment advisor promises to provide you with an annual retuno% he's promising to double your money in approximatelyyears; it, however, it actually takes 16 then your annual retun would be approximately - D) 103:45 B) 45, 11.1 C) 451:5.1

Explanation / Answer

1) Current price of Big Mac $4.00 Next Year price of Big Mac = $4 x (1+ 2.50%) $4.10 Current Investment = $4 x 20 $80.00 Future Value = $4.10 x 22 $90.20 Rate of Return = Rate(1,0,-$80,$90.20) 12.75% b) Loan $5,000.00 Coupon Rate 9.00% Period 5 Annual Payment 1285.46 % of interest = $450/$1285.46 35% Year Annual Payment Interest = Previous Ending ball. x 9% Principal Ending bal. 0 $5,000.00 1 1285.46 $450.00 $835.46 $4,164.54 2 1285.46 $374.81 $910.65 $3,253.89 3 1285.46 $292.85 $992.61 $2,261.28 4 1285.46 $203.52 $1,081.94 $1,179.33 5 1285.46 $106.14 $1,179.32 $0.01 c) Double money in years = &2/ Rate = 72/7 $10.3 Required rate of Return = 72/Years = 72/16 4.5 %

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