Test 1 - Exam # 1 September 20, 2012 Name: _ Principles of...

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Exam # 1Name: _September 20, 2012Principles of Financial Management/ggitlenAll questions are of equal weight.1.The price of a bond is calculated by summing the present value of 2 sets of future cashflows.The first is an annuity of equal interest payments and the second is a single cashflow of the (return of the) face amount occurring on the final payment date.We expressthis mathematically as:If the Face Amount of a bond is $1000, and the bond pays interest of $80 per year for 10years, what is the price of this bond?Assume.a.$633.02b.$875.68c.$1000.00d.$1276.95e.$1345.54
2.Ashley’s cousin, Vinnie, the loan shark charges 2%/day on his loans.Since he has nothad the benefit of a finance course, he charges simple interest.Accordingly, how manydays would a $1000 loan from Vinnie turn into a $2000 debt for the borrower?
3.After taking this course, and learning about compounding interest, Vinnie is now carefulto tell his customers that his rate is “2% compounded daily”.Under this condition, howmany days will it take for the same borrower of $1000 to owe Vinnie $2000?
e.104 days4.Given the tax rates as shown, what are the taxes due for a firm with taxable income of$310,000?Taxable IncomeTax Rate$0 -50,00015%50,001 -75,00025%75,001 -100,00034%100,001 -335,00039%
5.For the above problem what is the marginal tax rate?a.21.38 percentb.15.00 percentc.25.00 percentd.33.60 percente.39.00 percent

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Term
Winter
Professor
MURDOCK

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