midterm FIN 5080

1 out of 1 points

Suppose you take a mortgage for $72,764 for 16 years with annual payments. If the annual interest rate is 3.4%, calculate the total interest amount paid over the life of the loan. That is, calculate the total interest paid in 16 years.
Hint: Use the amortization table.
Enter your answer rounded off to two decimal points. Do not enter $ in the answer box.

Selected Answer:
22,778.17
Correct Answer:
22,778.17 ± 0.5%

Response Feedback:
Step 1: Solve for PMT
Step 2: Use amortization table and obtain total interest paid

Question 2
1 out of 1 points

ABC Company earned $805,544 in taxable income for the year. How much tax does the company owe on this income?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Selected Answer:
273,884.96
Correct Answer:
273,884.96 ± 0.5%

Response Feedback:
113900 + (taxable income - 335000)*0.34

Question 3
0 out of 1 points

ABC is reviewing a project that will cost $1,802.The project will produce cash flows $683 at the end of each year for the first two years and $777 at the end of each year for the next three years. What is the profitability index? Assume interest rate is 13%.
Note: Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

Selected Answer:
[None Given]
Correct Answer:
1.43 ± 0.5%

Response Feedback:
PI = PV of all Future CFs/|initial outlay|

Question 4
0 out of 1 points

If you receive $1,939 at the end of each year for the first three years and $2,224 at the end of each year for the next two years. What is the future value of this cash flow stream? Assume interest rate is 4%.
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.