Questions -
Question 1 - John invests $15,000 into a retirement account. He expects to earn 12 percent, compounded monthly, on his money for the next 10 years. After that, for the next 15 years, he wants to be more conservative, so he only expects to earn 6 percent, compounded semi-annually. How much money will John have in his account when he retires 25 years from now, assuming this is the only deposit he makes into the account?
Question 2 - Consider an 8-year loan with annual payments at 10%. If the loan amount is $250,000, compute the interest paid during the fifth year.
Question 3 - As the required rate of return is increased, the:
PV increases, FV increases
PV decreases, FV increases
PV increases, FV decreases
PV decreases, FV decreases
Question 4 - Consider a taxable bond with a yield of 9.1% and a tax-exempt municipal bond with a yield of 6%. At what tax rate would you be indifferent between the two bonds?
Question 5 - What is the effective rate of 13% compounded monthly?
Question 6 - ABC recently reported $27,895 of sales, $5,902 of operating costs other than depreciation, and $2,514 of depreciation. The company had $4,697 of bonds that carry a 10% interest rate, and its income tax rate was 31%. How much was its net cash flow?
Question 7 - ABC Company has net income of $118,653, return on assets of 7.37 percent, and debt-equity ratio of 0.69. What is the return on equity?
Question 8 - ABC Company has a debt-equity ratio of 0.66. What is the debt ratio?
Question 9 - ABC Company offers a perpetuity which pays annual payments of $17,828. This contract sells for $239,166 today. What is the interest rate?
Question 10 - What is the net present value of the following cash flows? Assume an interest rate of 9.55%
|
Year
|
CF
|
|
0
|
-$13,945
|
|
1
|
$7,251
|
|
2
|
$5,760
|
|
3
|
$7,893
|
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answers box.
Question 11 - If you receive $655 at the end of each year for the first three years and $4,431 at the end of each year for the next two years. What is the future value of this cash flow stream? Assume interest rate is 8%.
Question 12 - If you receive $392 at the end of each year for the first three years and $626 at the end of each year for the next three years. What is the present value? Assume interest rate is 10%.
Question 13 - Suppose an investment offers to triple your money in 17 years. What annual rate of return are you being offered if interest is compounded monthly?
Question 14 - ABC is reviewing a project that will cost $1,438.The project will produce cash flows $446 at the end of each year for the first two years and $643 at the end of each year for the next two years. What is the profitability index? Assume interest rate is 7%.
Question 15 - A project has the following cash flows. What is the internal rate of return?
Year 0 1 2 3
Cash flow -$121,000 68,150 $42,200 $39,100
14.39%
12.71%
13.47%
13.85%
14.82%
Question 16 - ABC Company earned $633,453 in taxable income for the year. How much tax does the company owe on this income?
Question 17 - A firm has a return on equity of 21 percent, a net profit margin of 8.4 percent, and total equity of $675.1. What is the net income?
Question 18 - Your firm has the following balance sheet statement items: total current liabilities of $325,000; total assets of $3,655,000; fixed and other assets of $1,770,000; and long-term debt of $200,000. What is the amount of the firm's net working capital?
$1,885,000
$1,685,000
$325,000
$1,080,000
$1,560,000
Question 19 - In its most recent financial statements, ABC reported $56,187 of net income and $588,283 of retained earnings. The previous retained earnings were $684,175. How much in dividends was paid to shareholders during the year?
Question 20 - ABC's current assets comprise of cash, accounts receivables, and inventory. ABC has $11,522 in cash, $7,847 in accounts receivables, and $9,068 in inventory. If the current ratio is 2.2 times, compute the quick ratio.
Question 21 - Assume that a company has $132,961 of taxable income from operations plus $8,855 of interest income and $21,804 of dividend income. What is the company's federal tax liability?
Question 22 - ABC has the following data for the year ending 12/31/10: Net income = $600; Net operating profit after taxes (NOPAT) = $3,405; Total assets = $2,500; Short-term investments = $200; Stockholders' equity = $1,800; Total debt = $700; and Total operating capital = $5,659. ABC's weighted average cost of capital is 13%. What is its economic value added (EVA)?
Question 23 - An investment is acceptable if the profitability index (PI) of the investment is:
greater than one.
greater than the internal rate of return (IRR).
less than one.
greater than a pre-specified rate of return.
less than the net present value (NPV).
Question 24 - How many years will it take to double your money at 7% compounded semi-annually?
Question 25 - If you put $434 in a savings account at the beginning of each year for 18 years, how much money will be in the account at the end of the 18th year? Assume that the interest rate is 5.
Question 26 - In 2012, ABC had operating income (EBIT) of $15,028, interest expense of $3,425, and dividend expense of $2,386. If the tax rate is 30%, what is the transfer to Retained Earnings?
Question 27 - Stern Associates is considering a project that has the following cash flow data. What is the project's payback?
Year 0 1 2 3 4 5
Cash flows -$1,100 $300 $310 $320 $330 $340
2.85 years
3.52 years
2.31 years
3.16 years
2.56 years
Question 28 - You've decided to pursue higher education and enroll in a MS in Finance program. If you borrowed $50,000 at a fixed interest rate of 7.5% and can only make payments of $5,000 per year to pay off the loan, at the end of this and each additional year. How many years will it take before you can once again live debt-free?