sample midterm no ans 316

sample midterm no ans 316 - Finance 316: Financial...

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1 Finance 316: Financial Management Sample Midterm This is identical to the practice test on BB but does not show the answers. 1. Which of the following appears to be the most appropriate goal for corporate management? a. Maximizing market value of the company’s stock. b. Maximizing the company’s market share. c. Maximizing the current profits of the company. d. Minimizing the company’s liabilities. 2. Deciding what long term assets a company should invest in is referred to as: a. Capital structure decisions b. Capital budgeting decisions c. Working capital management decisions d. Financing decisions 3. If Esther deposits $100 into a bank account which earns 10% interest compounded quarterly for 3 years, how much money does she have at the end of 3 years? 4. Which account would be preferred by a depositor (i.e. you are earning money) and why? A 6% APR with monthly compounding or 6.5% APR with semi-annual compounding? 5. What is the present value of the following payment stream discounted at 8% annually: $1,000 at the end of year 1, $3,000 at the end of year 2, and $5,000 at the end of year 3? 6. A local bank will pay you a level cash payment each year beginning today for your lifetime if you deposit $2,500 in the bank today. You require a 10% rate of return. You plan to live forever. a. Is this an annuity, a perpetuity, or neither?
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2 b. What level cash payment is the bank paying you? 7. You want to buy a car and it costs $15,000. Interest rates are 7.5% annually. You decide that you want a 5-year loan where payments are made at the end of each month. What are your monthly payments? 8.
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This note was uploaded on 05/22/2011 for the course BA 316 taught by Professor Meeks during the Spring '08 term at University of Oregon.

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sample midterm no ans 316 - Finance 316: Financial...

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