1. If Analog Computers can borrow at 12% annually for three years, what is the effective rate of interest on a $1,000,000 loan where a 20% compensating balance is required?

a. 12%

b.14.59%

c. 12.75%

d.15%

2. You are offered to receive $500,000 in 50 years. The discount rate is 13%you are offered $5,000 for this payment now should you accept it ?

a.no

b.yes

c. not enough information

3. After hearing about the great prices at Riverside Liquors, you stop by to pick up a few things and purchase a Lottery ticket. Your ticket wins $50,000,000. You are to receive $1,000,000 a year for the next 20 years and $30,000,000 in year 20. Your discount rate is 8%. What is the present value of your winnings ?

a. 32,200,234

b. 16,254,594

c. 12,345,444

d. 22,345,444

4. If you owe $56,000 payable at the end of 9 years, what amount should your creditor accept in payment now if they could earn 7% on their money

a. 30,460

b. 29,000

c. 28,897

d. 26,500