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# - comprehensive exam question bank Multiple Choice Identify the choice that best completes the statement or answers the question 1 What would the

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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 3-year 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 5-year 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 6-year 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

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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 30-year 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 non-operating 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 non-operating income. It had issued \$4,000 of bonds that carry a 7% interest rate, and its federal-plus-state income tax rate was 40%. What was the firm's operating income, or EBIT? a.
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## 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.

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- comprehensive exam question bank Multiple Choice Identify the choice that best completes the statement or answers the question 1 What would the

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