Exam3 FIN370 B Key (1)

# Which one of the following has the lowest effective

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45. Which one of the following has the lowest effective annual rate? A. 7 percent compounded semi-annually B. 7 percent compounded daily C. 7 percent compounded quarterly D. 7 percent compounded monthly E. 7 percent compounded annually BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 005 #24 SECTION: 5.3 TOPIC: EFFECTIVE ANNUAL RATE TYPE: CONCEPTS 46. The National Bank offers personal loans at 8 percent compounded monthly. The Global Bank offers similar loans at 8.25 percent compounded quarterly. Which one of the following statements is correct concerning these two banks? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 005 #85 SECTION: 5.3 TOPIC: EFFECTIVE ANNUAL RATE TYPE: PROBLEMS 47. Conway & Sons had \$26,500 in net fixed assets at the beginning of the year. During the year, the company purchased \$5,700 in new equipment. It also sold, at a price of \$1,000, some old equipment with a book value of \$850. The depreciation expense for the year was \$4,300. What is the net fixed asset balance at the end of the year? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 002 #57 SECTION: 2.1 TOPIC: NET FIXED ASSETS TYPE: PROBLEMS

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48. A firm is reviewing a project that has an initial cost of \$85,000. The project will produce cash inflows, starting with year 1, of \$10,000, \$15,500, \$23,600, \$30,100, and finally in year five, \$38,700. What is the profitability index if the discount rate is 14 percent? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 6 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 008 #95 SECTION: 8.5 TOPIC: PROFITABILITY INDEX TYPE: PROBLEMS 49. The dividend yield is computed as: A. (D t+1 D t ) / P t . B. D t+1 / P t . C. (P t+1 + D t+1 ) / P t D. P t+1 / D t . E. (D t+1 D t ) / P t+1 . BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 010 #8 SECTION: 10.1 TOPIC: DIVIDEND YIELD TYPE: CONCEPTS 50. The amount by which a firm's tax bill is reduced as a result of the depreciation expense is referred to as the depreciation: BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 009 #7 SECTION: 9.3 TOPIC: DEPRECIATION TAX SHIELD TYPE: DEFINITIONS

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