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1) You purchased a car at the beginning of the year for $35,000 and you noticed a similar used car just sold for $28,000. You financed the purchased with a $30,000 auto loan and paid $5,000 from your savings. If your loan balance is currently $23,635, what is the current market value?

Group of answer choices

$35,000

$28,635

$28,000

$21,635

2)

If interest rates increase significantly in the future, in what ways will your borrowing decisions and financial ratios be impacted?

Group of answer choices

Higher rates will increase the amount of loan you can obtain because your debt payment ratios will increase.

Higher rates will reduce the amount of loan you can obtain because your debt payment ratios will increase.

Higher rates will reduce the amount of loan you can obtain because your debt payment ratios will decrease.

3)

You just won a $20 million lottery. You can choose either receiving $8 million today or $800,000 per year for 25 years. Assuming you think you, can earn 8% per year on your investments, compounded annually, which of these alternatives is preferable?

Group of answer choices

$8 million lump sum is preferable because the annuity is worth $7,854,518.

$8 million lump sum is preferable because the annuity is worth $2,920,358.

Annuity is preferable because its worth $20 million

Annuity is preferable because it is worth $8,539,821 to you

Higher rates will increase the amount of loan you can obtain because your debt payment ratios will decrease.

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