Minh Anh

If a project  has a net present value equal to zero, then

• remains constant

• increases

• decreases

• becomes negative

Samantha opened a savings account this morning. Her money will earn 5 percent interest, compounded annually. After five years, her savings account will be worth $5,600. Assume she will not make any withdrawals. Given this, which one of the following statements is true?

• Samantha deposited more than $5,600 this morning.

• The present value of Samantha's account is $5,600

• Samantha could have deposited less money and still had $5,600 in five years if she could have earned 5.5 percent interest.

• Samantha would have had to deposit more money to have $5,600 in five years if she could have earned 6 percent interest.

• Samantha will earn an equal amount of interest every year for the next five years.

Winston Industries had sales of $843,800 and costs of $609,900. The firm paid $38,200 in interest and $18,000 in dividends. It also increased retained earnings by $62,138 for the year. The depreciation was $76,400. What is the average tax rate?

• 32.83 percent

• 33.33 percent

• 43.39 percent

• 38.17 percent

• 48.87 percent

Jensen Enterprises paid $1,300 in dividends and $920 in interest this past year. Common stock increased by $1,200 and retained earnings decreased by $310. What is the net income for the year?

• -$210

• $990 

• $1,610

• $1,910

• $2,190

You are comparing two investment options that each pay 5 percent interest, compounded annually. Both options will provide you with $12,000 of income. Option A pays three annual payments starting with $2,000 the first year followed by two annual payments of $5,000 each. Option B pays three annual payments of $4,000 each. Which one of the following statements is correct given these two investment options?

• Both options are of equal value given that they both provide $12,000 of income.=>no

• Option A has the higher future value at the end of year three.=> no

• Option B has a higher present value at time zero than does option A.=>yes

• Option B is a perpetuity.=> by annunity

• Option A is an annuity.=> no cash flow

Your grandmother is gifting you $125 a month for four years while you attend college to earn your bachelor's degree. At a 6.5 percent discount rate, what are these payments worth to you on the day you enter college?

• $3,184,467

• $3,277,973

• $3,006,409

• $3,318,190

• $3,466.667

Your car dealer is willing to lease you a new car for $245 a month for 48 months. Payments are due on the first day of each month starting with the day you sign the lease contract. If your cost of money is 6.5 percent, what is the current value of the lease?

• $10,331.03

• $10,386.99

• $12,197.74

• $12,203.14

• $13,008.31

A Treasury yield curve plots Treasury interest rates relative to which one of the following?

• market rates

• comparable corporate bond rates

• the risk-free rate

• inflation

• TIME TO maturity 

.

• I only

• I and III only

• I and IV only

• II and III only

• II and IV only

.

• II only

• I and III only

• I and IV only 

• II and III only

• II and IV only