EXAM I: PRACTICE
1.The forecast of cash receipts and
disbursements for the next planning period
is called a:
a.Pro forma income statement.
b.Statement of cash flows.
c.Cash budget.
d.Receivables analysis.
e.Credit analysis.
2.Which of the following statements is false
?
3.If taxable income is $92,000, then the
______
.
4.An insurance company promises to pay Jane
$1 million on her 65th birthday in return for
a onetime payment of $125,000 today.
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(Jane just turned 30.) At what rate of interest
would Jane be indifferent between accepting
the company's offer and investing the
premium on her own?
a.3.4%
b.4.5%
c.5.1%
d.6.1%
e.7.2%
5.The interest rate used to calculate the
present value of future cash flows is called
the ________ rate.
In a growing midwestern town, the number of eating establishments at the end of each of the last five
years are as follows:
Year 1 = 273; Year 2 = 279; Year 3 = 302; Year 4 = 320; Year 5 = 344
6.Between the end of year 2 and the end of
year 3, the number of eating establishments
grew at a rate of _______
compounded
annually.
a.5.2%
b.6.7%
c.7.6%
d.8.2%
e.9.3%
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 Spring '08
 Hall
 Net Present Value

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