Question 1. You have just taken out a 10-year, $12,000 loan to purchase a new car. This loan is to be repaid in 120 equal end-of-month installments. If each of the monthly installments is $150, what is the effective annual interest rate on this car loan?
a. 6.5431
B. 7.8942
C. 8.6892
D. 8.8869
E. 9.0438
Question 2. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form.
Question 3. Which of the following statements is most correct?
A. The present value of an annuity due will exceed the present value of an ordinary annuity.
b. The future value of an annuity due will exceed the future value of an ordinary annuity.
c. The nominal interest rate will always be greater than or equal to the effective annual interest rate
d. Statements a and b are correct
E. All of the statements above are correct
Question 4. Which of the following could explain why a business might choose to organize as a corporation rather thatn as a sole proprietorship or a partnership.
a. Corporations generally face fewer regulations
b. Corporations generally face lower taxes.
c. Corporations generally find it easier to raise capital
d. Corporations enjoy unlimited liability
e. Statements c and d are correct.