Exam2_solution_Spring2009 - FINC3131 Business Finance...

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FINC3131 Business Finance Spring2009 Exam2 Student Name: Attention: You should write Formula only on your notecard or indexcard. Otherwise, you will get 0 on this test. Points: 20 1. A company’s 2005 sales were $100 million. If sales grow at 8% per year, how large will they be 10 years later, in millions? a. $190.49 b. $225.54 c. $188.32 d. $201.15 e. $215.89 2. How much would $10,000 due in 100 years be worth today if the discount rate were 10%? 3. You want to buy a condo 5 years from now, and you plan to save $3,000 per year, beginning immediately. You will make 5 deposits in an account that pays 6% interest. Under these assumptions, how much will you have 5 years from today? 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? 5. You just won the state lottery. The state gives you the choice of $1,000,000 today or a 20-year annuity of $75,000, with the first payment
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coming one year from today. What rate of return is built into the annuity? a. 5.91% b. 6.71% c. 4.54% d. 5.59% e. 4.22%
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