Name
Section
ID #
(Professor Alagurajah’s Sections O (Wednesdays, 7-10 pm) and S (Thursdays,
7-10 pm), Professor Ho’s Section T (Tuesdays, 2:30-5:30 pm), Professor King’s
Section P (Internet), Professor Li’s Sections M (Thursdays, 2:30-5:30 pm) and N
(Tuesdays, 7-10 pm), Professor Tissenbaum’s Section Q (Mondays, 7-10 pm),
and Professor Yildirim’s Section R (Mondays, 4-7 pm).)
AK/ADMS 3530.03 Finance Final Exam
Winter 2008
April 10, 2008
Type A Exam - Part II
This part consists of
25 multiple choice questions
, 2 points each for a total of
50 points
. Choose the response which best answers each question.
Circle your
answer below
and fill in your answers on the bubble sheet
.
Only the bubble
sheet is used to determine your exam score
.
Please do
not
forget to write
your name and ID # at the top of this cover page and on the bubble sheet. Also
please write the type of your exam (A or B) on the bubble sheet. Be sure to
blacken the bubbles corresponding to your student number.
Please note the following points
:
1)
Read the questions carefully and use your time efficiently
.
2) Choose the answers that are
closest
to yours, because of possible
rounding.
3) Keep at least
2
decimal places in your calculations and final answers,
and at least
4
decimal places for interest rates.
4) Unless otherwise stated, interest rates are
annual
, and bonds have a
face value (or par value) of
$1,000
and pay coupons
semiannually
.
5) You may use the back of the exam paper as your scrap paper.
16 numerical questions (2 points each)
26. Your firm needs to borrow $100,000 for 3 years and the bank is willing to lend
you the money.
Which of the following methods is the most cost effective way
(i.e., will cost the least) for your company to repay the loan?
A) A lump sum repayment of the loan at the end of 3 years from now of
$133,100.
B) Pay back $10,500 each at the end of years 1 and 2 from today and
$110,500 at the end of year 3 from now.
C) Repay $40,921.31 each at the end of years 1, 2 and 3 from today.
D) Doesn’t matter which option you choose.
They all cost the same.
1