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CFIN300 Midterm Fall 2007 Version A.doc

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FIN 300
Mike Inglis

Ryerson University CFIN300 Midterm Exam Fall 2007 There are 2.0 hours in this exam. Version A Student Name ____________________________ (Please Print) Student Number _________________________________ Notes: 1. This is a closed book exam. You may only have pens, pencils and a calculator at your desk. 2. A formula sheet is attached to the end of the exam. You may detach the formula sheet from the exam. Please fill out the scanner sheet as you go along in the exam. You will not be given extra time at the end of the exam to fill it out. 3. Select the best possible answer for each multiple-choice question 4. Each of the 30 MC questions is worth 1 mark Marks: Available Total 30 _________ CFIN300 Midterm Exam Fall 2007 There are 14 pages in this exam. Page 2 CFIN300 Midterm Exam Fall 2007 2. Poor Dog, Inc. borrowed $135,000 from the bank today. They must repay this money over the next six years by making monthly payments of $2,215.10. What is the interest rate on the loan? Express your answer with annual compounding. A) 5.98% B) 6.63% C) 4.71% D) 5.65% E) 5.80% 3. How much would you pay for a security that pays you $500 every 4 months for the next 10 years if you require a return of 8% per year compounded monthly? A) $11,228.48 B) $15,000.00 C) $10,260.00 D) $13,724.90 E) $10,200.23 4. You can earn 5% per year compounded annually for the next 4 years, followed by 8% per year compounded quarterly for 5 years. What is the average annual compounded rate of return over the 9 year period? Express your answer with monthly compounding. A) B) 6.82% C) 6.97% D) 6.43% E) 6.59% 5. You have just purchased a house for $540,000 with a $200,000 down payment. You are going to get a mortgage at the TF bank for the balance. TF is charging a rate of 5.8% per year compounded semi-annually on 5 year term mortgages. You want to make weekly payments amortized over 20 years. What is your weekly payment? A) $877.60 B) $549.01 C) $545.47 D) E) $871.92 6. Master Meter is planning on constructing a new $20 million facility. The company plans to pay 20% of the cost in cash and finance the balance. How much will each monthly loan payment be if they can borrow the necessary funds for 30 years at 9% per year compounded semi-annually? A) $128,740 Page 3 CFIN300 Midterm Exam Fall 2007 B) $158,567 C) $160,925 D) $141,982 E) $126,853 7. Gerry Industries has some 8% (per year compounded semi-annually) coupon bonds on the market that are selling at $989, pay interest semi-annually, and mature in fifteen years. The company would like to issue $1 million in new fifteen-year bonds. What coupon rate should be applied to the new bonds if Gerry Industries wants to sell them at par? Express your answer with semi-annual compounding. A) 8.00% B) 8.33% C) 7.87% D) 8.13% E) 8.26% 8. You have decided to save $30 a week for the next three years as an emergency fund. You can earn 3.5 % per year compounded weekly. How much would you have to deposit in one lump sum today to have the same amount in your savings at the end of three years? A) $4,441.26 B) $4,382.74 C) $4,288.87 D) $4,305.19 E) $4,414.14 9. A credit card company charges you an interest rate of 1.25% per month. The annual percentage rate is ____ and the effective annual rate is _______. A) 15.00%; 16.08% B) 16.08%; 15.00% C) 15.00%; 15.00% D) 15.00%; 14.55% E) 14.55%; 15.00% 10. The Friendly Bank wants to earn an effective annual rate of 9% on its auto loans. If interest is compounded monthly, what APR must they charge? A) 8.65% B) 9.17% C) 8.58% D) 9.38% E) 8.44% Page 4
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