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1. Ellen now has \$125. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding?

A) \$205.83
B) \$216.67
C) \$228.07
D) \$240.08
E) \$252.08

2. Last year Rocco Corporation’s sales were \$225 million. If sales grow at 6% per year, how large (in millions) will they be 5 years later?

A) \$271.74
B) \$286.05
C) \$301.10
D) \$316.16
E) \$331.96

3. How much would \$1, growing at 3.5% per year, be worth after 75 years?

A) \$12.54
B) \$13.20
C) \$13.86
D) \$14.55
E) \$15.28

4. Suppose a State of California bond will pay \$1,000 eight years from now. If the going interest rate on these 8-year bonds is 5.5%, how much is the bond worth today?

A) \$651.60
B) \$684.18
C) \$718.39
D) \$754.31
E) \$792.02

5. Suppose the U.S. Treasury offers to sell you a bond for \$747.25. No payments will be made until the bond matures 5 years from now, at which time it will be redeemed for \$1,000. What interest rate would you earn if you bought this bond at the offer price?

A) 4.37%
B) 4.86%
C) 5.40%
D) 6.00%
E) 6.60%

6. The Morrissey Company’s bonds mature in 7 years, have a par value of \$1,000, and make an annual coupon payment of \$70. The market interest rate for the bonds is 8.5%. What is the bond’s price?

A) \$923.22
B) \$946.30
C) \$969.96
D) \$994.21
E) \$1,019.06

7. Ezzell Enterprises’ noncallable bonds currently sell for \$1,165. They have a 15-year maturity, an annual coupon of \$95, and a par value of \$1,000. What is their yield to maturity?

A) 6.20%
B) 6.53%
C) 6.87%
D) 7.24%
E) 7.62%

8. Garvin Enterprises’ bonds currently sell for \$1,150. They have a 6-year maturity, an annual coupon of \$85, and a par value of \$1,000. What is their current yield?

A) 7.39%
B) 7.76%
C) 8.15%
D) 8.56%
E) 8.98%

Ellen now has \$125_How much would she have after 8 years if she leaves it invested at 8.5%_Answer