:
Working out would be welcome :) full marks awarded
4. Six years ago your friend had borrowed $150,000 for a tenyear period at an interest
rate of 12% p.a. with interest compounded on an annual basis. She has been making
regular annual payments on the loan and now wishes to repay in full the amount
outstanding on this loan. The total amount she will need to repay is closest to:
a) $80,634.
b) $88,058.
c) $95,879.
d) $106,191.
5. The state government has just fined the University of Sydney for breaches of the fire
regulation act. It has offered the following payment options to the University.
Assuming that the interest rate appropriate for the University is 10% p.a. and all cash
flows occur at the end of each year, which payment option should the University
choose?
a) $150,000 per year for the next five years.
b) $400,000 at the end of year one and $200,000 at the end of year two.
c) $550,000 now.
d) $850,000 at the end of year five.
6. BFF Ltd has decided to draw down a 180day Australian bank accepted bill to meet its
shortterm liquidity needs. The companyâ€™s bank charges an acceptance fee of 1% p.a.
and a $2,000,000 bank bill is drawn down to yield 6.0% p.a. The net proceeds received
by the company are closest to:
a) $1,922,523.
b) $1,932,660.
c) $1,942,523.
d) $1,952,386.
