Question 1

You invest $10,000 in August 2004.In August 2009,the investment is worth $12,000.What was your compound annual rate of return over the period?

Accepted Answer

A)  3.09% 
B)  3.71% 
C)  4.00% 
D)  4.21% 
A)  3.09% 
B)  3.71% 
C)  4.00% 
D)  4.21%

Question 2

If you were to invest $120 for two years,while earning 8% SIMPLE interest,what is the TOTAL AMOUNT OF INTEREST that you will earn?

Accepted Answer

A)  $139.97 
B)  $139.20 
C)  $19.20 
D)  $19.97 
A)  $139.97 
B)  $139.20 
C)  $19.20 
D)  $19.97

Question 3

Cozmo Costanza just took out a $24,000 bank loan to help purchase his dream car.The bank offered a 5-year loan at a 6% APR.The loan will feature monthly payments and monthly compounding of interest.What is the monthly payment for this car loan?

Accepted Answer

A)  $400.00 
B)  $463.99 
C)  $470.25 
D)  $474.79 
A)  $400.00 
B)  $463.99 
C)  $470.25 
D)  $474.79

Question 4

What is the future value of cash flows 1-5 AT THE END YEAR 5,assuming a 6% interest rate (compounded annually)?

Accepted Answer

A)  $13,879.36 
B)  $13,093.74 
C)  $9,7844.40 
D)  $11,548.48 
A)  $13,879.36 
B)  $13,093.74 
C)  $9,7844.40 
D)  $11,548.48

Question 5

Suppose you made a $10,000 investment ten years ago in a speculative stock fund.Your investment today is worth $100,000.What annual compounded return did you earn over the ten year period?

Accepted Answer

A)  10% 
B)  15% 
C)  25.89% 
D)  27.54% 
A)  10% 
B)  15% 
C)  25.89% 
D)  27.54%

Question 6

You are planning your retirement and you come to the conclusion that you need to have saved $1,250,000 in 30 years.You can invest into an retirement account that guarantees you a 5% annual return.How much do you have to put into your account at the end of each year to reach your retirement goal?

Accepted Answer

A)  $81,314.29 
B)  $18,814.30 
C)  $23,346.59 
D)  $12,382.37 
A)  $81,314.29 
B)  $18,814.30 
C)  $23,346.59 
D)  $12,382.37

Question 7

EmmaCat Industries estimates that the scratching post project "Wonder Post" will have the following end of the year cash flows.What is the PRESENT VALUE of the inflows of Wonder Post if the annual rate of interest is 10% COMPOUNDED CONTINOUSLY?

Accepted Answer

A)  $3,102.32 
B)  $3,199.11 
C)  $3,208.22 
D)  $3,206.73 
A)  $3,102.32 
B)  $3,199.11 
C)  $3,208.22 
D)  $3,206.73

Question 8

Calculate the monthly payment for a 20-year mortgage on a $3.5 million building at a 7.5% interest rate.Assume that the entire building is financed and that payments are made at the end of each month,starting at the end of the first month and ending at the end of the last month.

Accepted Answer

A)  $28,020.63 
B)  $28,195.76 
C)  $36,458.33 
D)  $61,947.83 
A)  $28,020.63 
B)  $28,195.76 
C)  $36,458.33 
D)  $61,947.83

Question 9

What is the future value at year 3 of the following set of cash flows if the discount rate is 11%?

Accepted Answer

A)  $738 
B)  $761 
C)  $789 
D)  $812 
A)  $738 
B)  $761 
C)  $789 
D)  $812

Question 10

You found your dream house.It will cost you $175,000 and you will put down $35,000 as a down payment.For the rest you get a 30-year 6.25% mortgage.What will be your monthly mortgage payment (assume no early repayment)?

Accepted Answer

A)  $729 
B)  $862 
C)  $389 
D)  $605 
A)  $729 
B)  $862 
C)  $389 
D)  $605

Question 11

You are offered a security that will pay you $2,500 at the end of the year forever.If your discount rate is 8%,what is the most you are willing to pay for this security?

Accepted Answer

A)  $26,686 
B)  $62,500 
C)  $50,000 
D)  $31,250 
A)  $26,686 
B)  $62,500 
C)  $50,000 
D)  $31,250

Question 12

Which of the following statements are TRUE?

Accepted Answer

A)  Statement I only 
B)  Statements I and II 
C)  Statement II only 
D)  Statements I and III only 
A)  Statement I only 
B)  Statements I and II 
C)  Statement II only 
D)  Statements I and III only

Question 13

Calculate the annual payment for a 20-year mortgage on a $3.5 million building at a 7.5% interest rate.Assume that the entire building is financed and that payments are made at the end of each year,starting at the end of the first year and ending at the end of the 20th year.

Accepted Answer

A)  $175,000.00 
B)  $343,322.67 
C)  $186,293.52 
D)  $340,815.32 
A)  $175,000.00 
B)  $343,322.67 
C)  $186,293.52 
D)  $340,815.32

Question 14

If you were to invest $120 for two years,while earning 8% compound interest,what is the TOTAL AMOUNT OF INTEREST that you will earn?

Accepted Answer

A)  $139.97 
B)  $139.20 
C)  $19.20 
D)  $19.97 
A)  $139.97 
B)  $139.20 
C)  $19.20 
D)  $19.97

Question 15

You are trying to prepare a budget based upon the amount of cash flow that you will have available 5 years from now.You are initially promised a regular annuity of $50 with the first payment to be made 1 year from now and the last payment 5 years from now.However,you are actually going to receive an annuity due with the same number of payments but where the first payment is to begin immediately.How much (or less)cash will you have 5 years from now based upon that error if the rate to invest funds is 10%?

Accepted Answer

A)  $50.00 
B)  $38.58 
C)  $30.52 
D)  ($30.52) 
A)  $50.00 
B)  $38.58 
C)  $30.52 
D)  ($30.52)

Question 16

You will receive a stream of annual $70 payments to begin at the end of year 0 until the final payment at the end of year 5.What amount will you have at the end of year 5 if you can invest all amounts at a 11% interest rate?

Accepted Answer

A)  $350.00 
B)  $420.00 
C)  $553.90 
D)  $614.83 
A)  $350.00 
B)  $420.00 
C)  $553.90 
D)  $614.83

Question 17

The ratio of interest to principal repayment on an amortizing loan

Accepted Answer

A)  increases as the loan gets older. 
B)  decreases as the loan gets older. 
C)  remains constant over the life of the loan. 
D)  changes according to the level of market interest rates during the life of the loan. 
A)  increases as the loan gets older. 
B)  decreases as the loan gets older. 
C)  remains constant over the life of the loan. 
D)  changes according to the level of market interest rates during the life of the loan.

Question 18

You are trying to accumulate $2,000 at the end of 5 years by contributing a fixed amount at the end of each year.You initially decide to contribute $300 per year but find that you are coming up short of the $2,000 goal.What could you do to increase the value of the investment at the end of year 5?

Accepted Answer

A)  invest in an investment that has a lower rate of return. 
B)  invest in an investment that has a higher rate of return. 
C)  make a sixth year contribution. 
D)  contribute a smaller amount each year. 
A)  invest in an investment that has a lower rate of return. 
B)  invest in an investment that has a higher rate of return. 
C)  make a sixth year contribution. 
D)  contribute a smaller amount each year.

Question 19

You want to buy a new car.The car you picked will cost you $32,000 and you decide to go with the dealer's financing offer of 5.9% compounded monthly for 60 months.Unfortunately,you can only afford monthly loan payments of $300.However,the dealer allows you to pay off the rest of the loan in a one time lump sum payment at the end of the loan.How much do you have to pay to the dealer when the lump sum is due?

Accepted Answer

A)  $14,000.00 
B)  $21,890.43 
C)  $25,455.37 
D)  $22,071.75 
A)  $14,000.00 
B)  $21,890.43 
C)  $25,455.37 
D)  $22,071.75

Question 20

You buy a house for $220,000 in a neighborhood where home prices have risen 5% annually on average.You suspect that growth in home prices will slow to an average of 3.5% per year over the next five years.If your growth estimate of 3.5% growth is correct,how much less will your house be worth in five years compared with 5% growth?

Accepted Answer

A)  $3,300.00 
B)  $16,500.00 
C)  $19,490.95 
D)  $13,870.51 
A)  $3,300.00 
B)  $16,500.00 
C)  $19,490.95 
D)  $13,870.51

You invest $10,000 in August 2004.In August 2009,the investment is worth $12,000.What was your compound annual rate of return over the period?

If you were to invest $120 for two years,while earning 8% SIMPLE interest,what is the TOTAL AMOUNT OF INTEREST that you will earn?

Cozmo Costanza just took out a $24,000 bank loan to help purchase his dream car.The bank offered a 5-year loan at a 6% APR.The loan will feature monthly payments and monthly compounding of interest.What is the monthly payment for this car loan?

What is the future value of cash flows 1-5 AT THE END YEAR 5,assuming a 6% interest rate (compounded annually)?

Suppose you made a $10,000 investment ten years ago in a speculative stock fund.Your investment today is worth $100,000.What annual compounded return did you earn over the ten year period?

You are planning your retirement and you come to the conclusion that you need to have saved $1,250,000 in 30 years.You can invest into an retirement account that guarantees you a 5% annual return.How much do you have to put into your account at the end of each year to reach your retirement goal?

EmmaCat Industries estimates that the scratching post project "Wonder Post" will have the following end of the year cash flows.What is the PRESENT VALUE of the inflows of Wonder Post if the annual rate of interest is 10% COMPOUNDED CONTINOUSLY?

Calculate the monthly payment for a 20-year mortgage on a $3.5 million building at a 7.5% interest rate.Assume that the entire building is financed and that payments are made at the end of each month,starting at the end of the first month and ending at the end of the last month.

What is the future value at year 3 of the following set of cash flows if the discount rate is 11%?

You found your dream house.It will cost you $175,000 and you will put down $35,000 as a down payment.For the rest you get a 30-year 6.25% mortgage.What will be your monthly mortgage payment (assume no early repayment)?

You are offered a security that will pay you $2,500 at the end of the year forever.If your discount rate is 8%,what is the most you are willing to pay for this security?

Which of the following statements are TRUE?

Calculate the annual payment for a 20-year mortgage on a $3.5 million building at a 7.5% interest rate.Assume that the entire building is financed and that payments are made at the end of each year,starting at the end of the first year and ending at the end of the 20th year.

If you were to invest $120 for two years,while earning 8% compound interest,what is the TOTAL AMOUNT OF INTEREST that you will earn?

You will receive a stream of annual $70 payments to begin at the end of year 0 until the final payment at the end of year 5.What amount will you have at the end of year 5 if you can invest all amounts at a 11% interest rate?

The ratio of interest to principal repayment on an amortizing loan

You are trying to accumulate $2,000 at the end of 5 years by contributing a fixed amount at the end of each year.You initially decide to contribute $300 per year but find that you are coming up short of the $2,000 goal.What could you do to increase the value of the investment at the end of year 5?

The Scope of Corporate Finance

Financial Statement and Cash Flow Analysis

Valuing Bonds

Valuing Stocks

The Trade-Off Between Risk and Return

Risk,return,and the Capital Asset Pricing Model

Capital Budgeting Process and Decision Criteria

Cash Flow and Capital Budgeting

Risk and Capital Budgeting

Raising Long-Term Financing

Capital Structure

Long-Term Debt and Leasing

Payout Policy

Financial Planning

Cash Conversion, inventory, and Receivables Management

Cash, payables, and Liquidity Management

International Financial Management

Options

Entrepreneurial Finance and Venture Capital

Mergers, acquisitions, and Corporate Control

Bankruptcy and Financial Distress

Risk Management

Filters

Exam 3: The Time Value of Money

You invest $10,000 in August 2004.In August 2009,the investment is worth $12,000.What was your compound annual rate of return over the period?

If you were to invest $120 for two years,while earning 8% SIMPLE interest,what is the TOTAL AMOUNT OF INTEREST that you will earn?

Cozmo Costanza just took out a $24,000 bank loan to help purchase his dream car.The bank offered a 5-year loan at a 6% APR.The loan will feature monthly payments and monthly compounding of interest.What is the monthly payment for this car loan?

What is the future value of cash flows 1-5 AT THE END YEAR 5,assuming a 6% interest rate (compounded annually)?

Suppose you made a $10,000 investment ten years ago in a speculative stock fund.Your investment today is worth $100,000.What annual compounded return did you earn over the ten year period?

You are planning your retirement and you come to the conclusion that you need to have saved $1,250,000 in 30 years.You can invest into an retirement account that guarantees you a 5% annual return.How much do you have to put into your account at the end of each year to reach your retirement goal?

EmmaCat Industries estimates that the scratching post project "Wonder Post" will have the following end of the year cash flows.What is the PRESENT VALUE of the inflows of Wonder Post if the annual rate of interest is 10% COMPOUNDED CONTINOUSLY?

Calculate the monthly payment for a 20-year mortgage on a $3.5 million building at a 7.5% interest rate.Assume that the entire building is financed and that payments are made at the end of each month,starting at the end of the first month and ending at the end of the last month.

What is the future value at year 3 of the following set of cash flows if the discount rate is 11%?

You found your dream house.It will cost you $175,000 and you will put down $35,000 as a down payment.For the rest you get a 30-year 6.25% mortgage.What will be your monthly mortgage payment (assume no early repayment)?

You are offered a security that will pay you $2,500 at the end of the year forever.If your discount rate is 8%,what is the most you are willing to pay for this security?

Which of the following statements are TRUE?

Calculate the annual payment for a 20-year mortgage on a $3.5 million building at a 7.5% interest rate.Assume that the entire building is financed and that payments are made at the end of each year,starting at the end of the first year and ending at the end of the 20th year.

If you were to invest $120 for two years,while earning 8% compound interest,what is the TOTAL AMOUNT OF INTEREST that you will earn?

You will receive a stream of annual $70 payments to begin at the end of year 0 until the final payment at the end of year 5.What amount will you have at the end of year 5 if you can invest all amounts at a 11% interest rate?

The ratio of interest to principal repayment on an amortizing loan

You are trying to accumulate $2,000 at the end of 5 years by contributing a fixed amount at the end of each year.You initially decide to contribute $300 per year but find that you are coming up short of the $2,000 goal.What could you do to increase the value of the investment at the end of year 5?

The Scope of Corporate Finance

Financial Statement and Cash Flow Analysis

Valuing Bonds

Valuing Stocks

The Trade-Off Between Risk and Return

Risk,return,and the Capital Asset Pricing Model

Capital Budgeting Process and Decision Criteria

Cash Flow and Capital Budgeting

Risk and Capital Budgeting

Raising Long-Term Financing

Capital Structure

Long-Term Debt and Leasing

Payout Policy

Financial Planning

Cash Conversion, inventory, and Receivables Management

Cash, payables, and Liquidity Management

International Financial Management

Options

Entrepreneurial Finance and Venture Capital

Mergers, acquisitions, and Corporate Control

Bankruptcy and Financial Distress

Risk Management

Filters