Department of Finance Koppelman School of Business a. 1 year b. 2 years c. 3 years d. 4 years e.5 years 15. After carefully going over your budget, you have determined you can afford to pay $922 per a new sports car. You call up your local bank and find out that the going rate is 1 percent month toward per month for 48 months. How much can you borrow? (choose the closest) a. $10,000 b. $16,000 c. $20,000 d. $24,000 e.$30,000 f. $35,000 16. You ran a little short on your spring break vacation, so you put $1,032 on your credit card. You can afford only the minimum payment of $20 per month. The interest rate on the credit card is 1.5 percent per month. How long will you need to pay off the $1,032? a. 80 months b.88 months c.90 months d. 94 months e. 100 months 17. Suppose you borrow $10,000 from your parents to buy a car. You agree to pay $222.44 per month for 60 months. What is the annual interest rate? (hint: after calculating monthly rate, multiply the monthly rate by 12.) a. 3% b. 4% c. 5% d. 6% e. 7% f. 8% g, 9% h. 10% i. 12% 18. You are looking at saving account that pays 14.40%, with monthly compounding. Its EAR is (%) a. 6.7 b. 7.7 c. 8.7 d.9.7 e. 10.7 f. 16.7 g. 13.7 h. 14.7 i. 15.4 j. 16.4 19. Suppose a company had earnings per share of $3 over the past year. The industry average PE ratio is 10. Use this information to value this company's stock price. a. $30 b. $31 c. $32 d. $33 e.$ 34 f$ 35 g $36 h. $37 i. $38 20. If a T-bill promises to repay $10,000 in one year and the market interest rate is 6 percent, how mu will the bill sell for in the market? (in dollars) a. 8800 b. 9376 c. 9434 d. 9845 e. 9974 f. 10023 g. 10342 h, 11195 21. Each payment covers the interest expense plus reduces principal. Consider a 4 year loan with annual payments. The interest rate is 8%, and the principal amount is $3974.55. What is the annual payment? (in dollars) a. 800 b. 900 c. 1000 d. 1100 e. 1200 f. 1300 g. 1500 h. 1700 22. Suppose Big D, Inc., just paid a dividend of $0.785 per share. It is expected to increase its divide 2% per year. If the market requires a return of 12% on assets of this risk, how much should the sta selling for? a. $2.1 b. S3.1 c. S4.3 d. S5.1 e. S61 f. S7.1 g. S80 hs 9.1