F11-MidtermExam_261

# F11-MidtermExam_261 - Surname Given Name UW ID Number...

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UW ID Number ___________________________ 2 Problem Marks: 1 /8 2 /12 3 /8 4 /15 5 /11 6 /12 7 /11 8 /13 9 /10 Total /100
UW ID Number ___________________________ 3 Problem 1. For each multiple choice question below, select the one correct response by circling the letter. 1.1 [2 marks] A present amount P is equivalent to an annuity series of N payments each of size A (with the first payment one period after P ), and both are equivalent to a future amount F at the same time as the N th payment in the annuity series. The interest rate is i , and i >0. (a) F = + + N N N i i i A ) 1 ( 1 ) 1 ( lim . (b) F < NA . (c) A = P/N + iP . (d) P > NA . (e) none of the above. 1.2 [2 marks] A company has two mutually exclusive proposed investments, labelled A and B. Proposal A has the larger first cost. Each proposal has a present worth greater than zero. Proposal B has a greater present worth. Internal rates of return have been calculated for each proposal, and for the incremental investment in A compared to B. (a)

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## This note was uploaded on 04/01/2012 for the course MSCI 261 taught by Professor Bonkoo during the Winter '09 term at Waterloo.

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F11-MidtermExam_261 - Surname Given Name UW ID Number...

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