2504b_practice_final_solutions0 - BUSI 2504B Practice Final...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: BUSI 2504B Practice Final SOLUTIONS Page 1/9 PART A: MULTIPLE CHOICE (10 QUESTIONS - 30 MARKS) [ 3] Q1. When net capital spending is a negative value, the firm has: (a) depreciation expense which exceeds the cost of new assets acquired. (b) acquired more fixed assets than it has current assets. (c) sold more fixed assets than it acquired during a stated period of time . (d) reduced its total assets during the course of the year. [ 3] Q2. What is the present value of $12,450 to be received 3 years from today if the discount rate is 4.25 percent? (a) $10,878.68. (b) $10,988.57 . (c) $10,929.13. (d) $8,788.24. [ 3] Q3. Bob bought some land costing $14,190. Today that same land is valued at $58,408. How long has Bob owned this land if the price of land has been increasing at 5 percent per year? (a) 28.51 years. (b) 28.67 years. (c) 28.72 years. (d) 29.00 years . [ 3] Q4. If you are borrowing money, which one of the following rates would you prefer? (a) 9% paid annually . (b) 9% compounded semi-annually. (c) 9% compounded quarterly. (d) 9% compounded monthly. [ 3] Q5. You are considering an annuity which costs $88,656 today. The annuity pays $6,100 a year. The rate of return is 5.5 percent. What is the length of the annuity time period? (a) 20.06 years. (b) 28.90 years. (c) 30.00 years . (d) 31.00 years. Page 2/9 BUSI 2504B Practice Final SOLUTIONS [ 3] Q6. You just paid $330,000 for a policy that will pay you and your heirs $12,200 a year forever. What rate of return are you earning on this policy? (a) 3.44 percent. (b) 3.57 percent. (c) 3.70 percent . (d) 3.30 percent. [ 3] Q7. If the coupon rate and yield to maturity are both 5%, then the bond must be: (a) A zero coupon bond. (b) Selling at a discount. (c) Selling at par . (d) Maturing within one year. [ 3] Q8. For a project with conventional cash flows, if NPV is greater than zero, then: (a) The IRR is equal to the firms required rate of return. (b) The profitability index is greater than 1 . (c) The payback period is faster than the firms required cutoff point. (d) The AAR exceeds the IRR. [ 3] Q9. The length of time needed to recover the initial investment once time value of money is considered is called the: (a) Discounted payback period . (b) Average accounting return period. (c) Discounted net present value period. (d) Payback period....
View Full Document

This note was uploaded on 12/15/2010 for the course BUSINESS BUSI 2504 taught by Professor Georgekowaski during the Spring '10 term at Carleton CA.

Page1 / 9

2504b_practice_final_solutions0 - BUSI 2504B Practice Final...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online