quiz 1-answers-from previous semester

quiz 1-answers-from previous semester - Principles of...

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Principles of Finance Quiz 1 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) If you borrow $50,000 at an annual interest rate of 12% for six years, what is the annual payment (prior to maturity) on a discount loan? 1) _______ A) $12,161.29 B) $8,333.33 C) $0.00 D) $6,000.00 2) A furniture store has a sofa on sale for $399.00, with the payment due one year from today. The store is willing to discount the price at an annual rate of 5% if you pay today. What is the amount if you pay today? 2) _______ A) $399 B) $419 C) $394 D) $380. 3) Amounts of money can be added or subtracted only if they are at the same point in time. 3) _______ A) False B) True 4) Which of the statements below is FALSE? 4) _______ A) The longer the loan, the greater the risk of nonpayment and the lower the interest rate the lender demands. B) The difference in rates as the borrowing time or investment horizon increases is due to the maturity premium of the investments. C) If you invest money for a short period and buy a six - month CD, you will not receive as high an interest rate as if you bought a CD with a longer maturity period. D) The maturity premium represents that portion of the yield that compensates the investor for the additional waiting time or the lender for the additional time it takes to receive repayment in full. 5) Ordinary annuity payments occur at the beginning of the period, whereas annuity due payments occur at the end of the period. 5) _______ A) False B) True 6) Understanding the sources and uses of cash in the recent past will enable a manager to ________ the cash flow for a potential project of the firm. 6) _______ A) predict more accurately B) forecast with perfect precision C) ignore D) know today E) None of the above 7) Assume you just bought a new home and now have a mortgage on the home. The amount of the principal is $200,000, the loan is at 6% APR, and the monthly payments are spread out over 10 years. The loan payment is about________. 7) _______ A) $2,156.38 B) $2,033.92 C) $2,220.41 D) $2,546.75 pdf Machine - is a pdf writer that produces quality PDF files with ease! Get yours now! “Thank you very much! I can use Acrobat Distiller or the Acrobat PDFWriter but I consider your product a lot easier to use and much preferable to Adobe's" A.Sarras - USA
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8) Tiger has $2,500 but needs $5,000 to purchase a new golf cart. If he can invest his money at a rate of 12% per year, approximately how many years will it take the money in Tiger’s account to grow to $5,000? Use the Rule of 72 to determine your answer. 8) _______
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This note was uploaded on 10/11/2011 for the course BUSINESS 2415 taught by Professor Dr.burke during the Fall '11 term at AIB College of Business.

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quiz 1-answers-from previous semester - Principles of...

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