{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

sample_test_questions

sample_test_questions - FinanceProfessor.com Bringing the...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
FinanceProfessor.com Bringing the real world to the classroom and vice versa! Web Questions 1. Your lease calls for payments of $500 a the end of each month for the next 12 months. Now your landlord offers you a new 1-year lease which calls for zero rent for 3 months, then rental payments of $700 at the end of each month for the next 9 months. You keep your money in a bank time deposit that pays a nominal annual rate of 5 percent. By what amount would your net worth change if you accept the new lease? a. -$509.81 b. -$253.62 c. $125.30 d. $253.62 e. $509.81 answer: b 1. A baseball player is offered a 5 year contract which pays him the following amounts: Year 1: 1.2 million Year 2: 1.6 million Year 3: 2.0 million Year 4: 2.4 million Year 5: 2.8 million Under the terms of the agreement all payments are made at the end of each year. Instead of accepting the contract, the baseball player asks his agent to negotiate contract which has a present value $1 million more than that which has been offered. Moreover, the player wants to receive his payments in the form of a 5 year annuity due. All cash flows are discounted at 10 percent. If the team were to agree to the players terms, what would be the player's annual salary (in millions of dollars)? a. $1.500 b. $1.659 c. $1.989 d. $2.343 Most Popular News Sources Finance Jobs Fun Links Islamic Finance Sign up for Finance Professor's free newsletter ! Note: We have been having difficulty with delivery via Bcentral (our main mail server). Therefore we have added two back-up mail providers for the newsletter. You
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern