You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan

You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the $2,600,000 purchase price. The monthly payment on this loan will be $12,200. What is the effective annual rate on this loan?    A.  5.95 percent B.  6.25 percent C.  6.46 percent D.  7.01 percent E.  7.50 percent Loan amount = $2,600,000 × 0.80 = $2,080,000   EAR = [1 + (.05797/12)]12 - 1 = 5.95 percent

122.

Consider a firm with a contract to sell an asset 3 years from now for $90,000. The asset costs $71,000 to produce today. At what rate will the firm just break even on this contract?    A.  7.87 percent B.  8.01 percent C.  8.23 percent D.  8.57 percent E.  8.90 percent $90,000 = $71,000 × (1 + r)3; r = 8.23 percent

123.	What is the present value of $1,100 per year, at a discount rate of 10 percent if the first payment is received 6 years from now and the last payment is received 30 years from now?    A.  $6,199.74 B.  $6,238.87 C.  $6,333.33 D.  $6,420.12 E.  $6,511.08   PV = $9,984.74/1.15 = $6,199.74