This preview shows pages 1–3. Sign up to view the full content.
comprehensive exam question bank
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
1.
What would the future value of $100 be after 5 years at 10% compound interest?
a.
$161.05
b.
$134.54
c.
$127.84
d.
$151.29
e.
$143.65
____
2.
Suppose a U.S. government bond promises to pay $2,249.73 three years from now. If the going interest rate
on 3year government bonds is 6%, how much is the bond worth today?
a.
$2,011.87
b.
$2,591.45
c.
$2,324.89
d.
$1,888.92
e.
$2,854.13
____
3.
Sims Inc. earned $1.00 per share in 2000. Five years later, in 2005, it earned $2.00. What was the growth rate
in Sims' earnings per share (EPS) over the 5year period?
a.
10.82%
b.
14.87%
c.
13.61%
d.
14.28%
e.
12.17%
____
4.
Addico Corp's 2005 earnings per share were $2, and its growth rate during the prior 5 years was 11.0% per
year. If that growth rate were maintained, how long would it take for Addico's EPS to double?
a.
6.64 years
b.
6.81 years
c.
6.99 years
d.
7.13 years
e.
7.28 years
____
5.
What is the PV of an annuity due
with 5 payments of $1,000 at an interest rate of 5%?
a.
$11,110.34
b.
$13,637.85
c.
$12,513.68
d.
$14,976.84
e.
$15,349.15
____
6.
Your father has $500,000 invested at 8%, and he now wants to retire. He wants to withdraw $50,000 at the
beginning of each year, beginning immediately
. How many years will it take to exhaust his funds, i.e., run the
account down to zero?
a.
11.34 years
b.
18.49 years
c.
17.54 years
d.
13.91 years
e.
15.27 years
____
7.
What's the present value of a 6year ordinary annuity of $1,000 per year plus an additional $1,500 at the end
of Year 6 if the interest rate is 6%?
a.
$5,324.89
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document b.
$5,591.45
c.
$5,974.77
d.
$6,011.87
e.
$4,854.13
____
8.
If a bank pays a 6% nominal rate, with monthly compounding, on deposits, what effective annual rate does
the bank pay?
a.
6.17%
b.
6.71%
c.
5.10%
d.
6.59%
e.
5.91%
____
9.
You are buying your first house for $220,000, and are paying $30,000 as a down payment. You have arranged
to finance the remaining $190,000 30year mortgage with a 7% nominal interest rate and monthly payments.
What are the equal monthly payments you must make?
a.
$1,513
b.
$1,110
c.
$1,264
d.
$1,976
e.
$1,349
____
10.
Companies generate income from their "regular" operations and from things like interest on securities they
hold, which is called nonoperating income. Mitel Metals recently reported $9,000 of sales, $6,000 of
operating costs other than depreciation, and $1,500 of depreciation. The company had no amortization
charges and no nonoperating income. It had issued $4,000 of bonds that carry a 7% interest rate, and its
federalplusstate income tax rate was 40%. What was the firm's operating income, or EBIT?
a.
This is the end of the preview. Sign up
to
access the rest of the document.
This note was uploaded on 10/03/2010 for the course FINANCE 08FB40447 taught by Professor Raymond during the Spring '10 term at University of Manchester.
 Spring '10
 RAYMOND
 Finance, Future Value, Interest

Click to edit the document details