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Pacific Bank pays a 4.50% nominal rate on deposits,with monthly compounding.What effective annual rate (EFF%) does the bank pay?


A) 3.72%
B) 4.13%
C) 4.59%
D) 5.05%
E) 5.56%

F) D) and E)
G) C) and D)

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You want to buy new kitchen appliances 2 years from now,and you plan to save $8,200 per year,beginning one year from today.You will deposit your savings in an account that pays 6.2% interest.How much will you have just after you make the 2nd deposit,2 years from now?


A) $15,260
B) $16,063
C) $16,908
D) $17,754
E) $18,642

F) B) and C)
G) A) and E)

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An uncle of yours who is about to retire wants to sell some of his stock and buy an annuity that will provide him with income of $50,000 per year for 30 years,beginning a year from today.The going rate on such annuities is 7.25%.How much would it cost him to buy such an annuity today?


A) $574,924
B) $605,183
C) $635,442
D) $667,214
E) $700,575

F) B) and C)
G) A) and E)

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What's the present value of a 4-year ordinary annuity of $2,250 per year plus an additional $3,000 at the end of Year 4 if the interest rate is 5%?


A) $8,509
B) $8,957
C) $9,428
D) $9,924
E) $10,446

F) A) and B)
G) B) and E)

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Your bank offers a 10-year certificate of deposit (CD) that pays 6.5% interest,compounded annually.If you invest $2,000 in the CD,how much will you have when it matures?


A) $3,754.27
B) $3,941.99
C) $4,139.09
D) $4,346.04
E) $4,563.34

F) B) and C)
G) B) and E)

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