Test 1 - Exam 1 Name Principles of Financial Management\/ggitlen All questions are of equal weight 1 The price of a bond is calculated by summing the

# Test 1 - Exam 1 Name Principles of Financial...

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Exam # 1 Name: _ September 20, 2012 Principles of Financial Management/ggitlen All 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.\$1345.54 2.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