FIN 304 Fall 24 - Quiz #1 (9/5)

An example of a capital budgeting decision is deciding:

• how much money should be kept in the checking account.

• how much inventory to keep on hand.

• how to refinance a debt issue that is maturing.

• whether or not to purchase a new machine for the production line.

• how many shares of stock to issue.

Which one of the following statements concerning a sole proprietorship is correct?

• A sole proprietorship is structured the same as a limited liability company.

• The sole proprietorship can continue even after the death of the sole proprietor.

• The owner of a sole proprietorship is personally responsible for all of the business's debts.

• The profits of a sole proprietorship are subject to double taxation.

• A sole proprietorship is designed to protect the personal assets of the owner.

Lucas expects to receive a sales bonus of $7,500 one year from now. The process of determining how much that bonus is worth today is called:

• aggregating

• discounting

• simplifying

• compounding

• extrapolating

The future value of a lump-sum investment will increase if you:

• decrease the interest rate.

• decrease the number of compounding periods.

• increase the time period.

• decrease the time period.

• decrease the lump-sum amount.

Suppose that in 2020, a $10 silver certificate from 1900 sold for $17,100. For this to have been true, what would the annual increase in the value of the certificate have been?

• 6.22%

• 6.01%

• 7.23%

• 6.40%

• 7.07%