18. You recently borrowed S18,000 to buy a new car. You plan on making payments

Question

18. You recently borrowed S18,000 to buy a new car. You plan on making payments every month for five years until you repay the loan. If the interest rate on your loan is 5.4%, what are your monthly payments? a. $370.48 b. $363.81 c. $351.02 d. $342.99 19. You decide you want your child to be a millionaire. You have a son today and you deposit S 16,000 in an investment account that earns 821% per year. account will be distributed to your son whenever the total reaches $1,000,000. How old will your son be when he gets the money (rounded to the nearest year)? The money in the a. 53 years b. 52 years c. 48 years d. 41 years 20. For a given nominal interest rate, an investor would receive a greater future value with which of the following? a. Weekly compounding b. Daily compounding c. Quarterly compounding d. Annual compounding 21. According to one of the principles of finance, when evaluating financial projects and decisions, we are most interested in: a. Total taxes b. Accounting profits c. Marginal cash flows d. Book values (Next Page) 5 of 6

Explanation / Answer

18.

N=12*5=60

PV=18000

I/Y=5.4%/12

CPT PMT=342.99

Option D

19.

PV=16000

I/Y=8.21%

FV=-1000000

PMT=0

CPT N=52.41

Option B

20.

Option B. Daily Compounding

21.

Option c. marginal Cash flows

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