Question Details

Your child- orthodontist offers you two alternative payment 

1.	You plan to borrow $35,000 at a 7.5% annual interest rate.  The terms require you to amortize the loan with 7 equal end-of-year payments.  How much interest would you be paying in Year 2?

a.	$1,994.49
b.	$2,099.46
c.	$2,209.96
d.	$2,326.27
e.	$2,442.59
	2.	Your bank offers to lend you $100,000 at an 8.5% annual interest rate to start your new business.  The terms require you to amortize the loan with 10 equal end-of-year payments.  How much interest would you be paying in Year 2?

a.	$7,531
b.	$7,927
c.	$8,323
d.	$8,740
e.	$9,177
	

3.	You are considering an investment in a Third World bank account that pays a nominal annual rate of 18%, compounded monthly.  If you invest $5,000 at the beginning of each month, how many months would it take for your account to grow to $250,000?  Round fractional months up.

a.	23
b.	27
c.	32
d.	38
e.	44
	
4.	You are considering investing in a bank account that pays a nominal annual rate of 7%, compounded monthly.  If you invest $3,000 at the end of each month, how many months will it take for your account to grow to $150,000?

a.	39.60
b.	44.00
c.	48.40
d.	53.24
e.	58.57
	
5.	Your child- orthodontist offers you two alternative payment plans.  The first plan requires a $4,000 immediate up-front payment.  The second plan requires you to make monthly payments of $137.41, payable at the end of each month for 3 years.  What nominal annual interest rate is built into the monthly payment plan?

a.	12.31%
b.	12.96%
c.	13.64%
d.	14.36%
e.	15.08%
	


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