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exam1b.ch1ch2ch5

# exam1b.ch1ch2ch5 - Name Webct User ID University of Houston...

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Name __________________________________ Webct User ID __________________________________ University of Houston C. T. Bauer College of Business Finance 3332 Principles of Financial Management Fall, 2007 Exam 1B To receive full credit, show all work—equations in variable form, equations with numbers plugged in—and clearly indicate your answer. Financial functions may be used only for finding annuity factors, and all inputs must be shown. 1. What is the value today of \$5000 to be received in five years if the opportunity cost is 7 percent compounded  continuously ? (5) 2. What is the effective rate of interest for a nominal rate of 24 percent compounded semi-annually? (5) 3. If I save \$12,000 per year for 14 years, how much would I have saved if my account earns 4 percent per year? (5) 4. I borrowed \$60,000 at a nominal annual rate of 6 percent for 8 years. How much will be my  monthly  payments? (8) 5. If I make the payments for the loan in #4 at the  beginning  of the month rather than at the end, how much will be  my monthly payments? (4) 6. How much would one pay for an investment which pays \$8,000 per year for 16 years, beginning in 14 years, if the  opportunity cost is 8 percent? (10) 7. Illustrate a brief version of the Income Statement in  algebraic form ,, beginning with Revenues, calculating  Earnings per Share. (4) EPS = 8. Two months ago I purchased 200 shares of stock for \$20 per share. Last week, I received a dividend check totaling  \$100, and the stock is now worth \$18.50 per share. What is my holding period return on this investment? (5)

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