Mr. Rich arranged for a mortgage loan for 65 percent of the $2.5 million purchase price of a home. The monthly payment will be $10,400 and the mortgage term is 30 years. What is the EAR on this loan?

Roger has just lost a lawsuit and has agreed to make equal annual payments of $18,300 for the next 5 years with the first payment due today. The value of this liability today is $77,000. What is the interest rate on the payments?

Thanh-Mi will receive $7,500 at the end of Year 2, $9,000 at the end of Year 3, and $12,500 at the end of Year 4. What is the future value of these cash flows at the end of Year 6 if the interest rate is 8 percent?

Ivan’s, Incorporated, paid $470 in dividends and $580 in interest this past year. Common stock increased by $190 and retained earnings decreased by $116. What is the net income for the year?

How much would you need to invest today as a lump sum at 10.5 percent compounded continuously, to have $200,000 in five years?

A firm has common stock of $82, paid-in surplus of $180, total liabilities of $370, current assets of $310, and net fixed assets of $520. What is the amount of the shareholders’ equity?

A municipal bond has a YTM of 5.13 percent while the YTM of a comparable taxable bond is 7.75 percent. What is the tax rate that will make an investor indifferent between the municipal bond and the taxable bond?

Thornton, Incorporated, had taxable income of $129,242 for the year. The company’s marginal tax rate was 34 percent and its average tax rate was 21 percent. How much did the company have to pay in taxes for the year?

The Lo Sun Corporation offers a 6.0 percent bond with a current market price of $788.50. The yield to maturity is 8.40 percent. The face value is $1,000. Interest is paid semiannually. How many years until this bond matures?

Recently, the owner of Martha’s Wares encountered severe legal problems and is trying to sell her business. The company built a building at a cost of $1,180,000 that is currently appraised at $1,380,000. The equipment originally cost $660,000 and is currently valued at $407,000. The inventory is valued on the balance sheet at $350,000 but has a market value of only one-half of that amount. The owner expects to collect 99 percent of the $195,200 in accounts receivable. The firm has $11,300 in cash and owes a total of $1,380,000. The legal problems are personal and unrelated to the actual business. What is the market value of this firm?