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Exam # 1 Name: _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 cash flows. The first is an annuity of equal interest payments and the second is a single cash flow of the (return of the) face amount occurring on the final payment date. We express this mathematically as:If the Face Amount of a bond is $1000, and the bond pays interest of $80 per year for 10 years, what is the price of this bond? Assume.a.$633.02b.$875.68c.$1000.00d.$1276.95e.$1345.542.Ashley’s cousin, Vinnie, the loan shark charges 2%/day on his loans. Since he has not had the benefit of a finance course, he charges simple interest. Accordingly, how many days 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 careful to tell his customers that his rate is “2% compounded daily”. Under this condition, how many days will it take for the same borrower of $1000 to owe Vinnie $2000?
4.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 - 335,000 39%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