Exam3 FIN370 B Key (1)

Which one of the following is a perpetuity a social

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23. Which one of the following is a perpetuity? A. social security payments of \$1,100 a month for life B. \$680 a month over the life of a lease C. \$1,000 annual payments from a trust fund forever D. student loan payments of \$360 a month for five years E. car payments of \$260 a month for 60 months BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 005 #13 SECTION: 5.2 TOPIC: PERPETUITY TYPE: CONCEPTS 24. A project has the following cash flows. What is the internal rate of return? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 008 #82 SECTION: 8.4 TOPIC: INTERNAL RATE OF RETURN TYPE: PROBLEMS 25. Which one of the following will increase the cash flow from assets, all else constant? BLOOMS TAXONOMY QUESTION TYPE: ANALYSIS LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: CHALLENGE Ross - Chapter 002 #42 SECTION: 2.4 TOPIC: CASH FLOW FROM ASSETS TYPE: CONCEPTS

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26. Brook's is a specialty retailer of souvenir wear. Currently, the firm offer T-shirts, sweatshirts, and caps. Its most recent annual sales consisted of \$18,000 of T-shirts, \$9,000 of sweatshirts, and \$1,800 of caps. The company is adding polo shirts to the line-up and projects that this addition will result in sales next year of \$15,000 of T-shirts, \$10,000 of sweatshirts, \$9,500 of polo shirts, and \$2,000 of caps. What amount of next year's revenue is from side effects of the additional product? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 009 #52 SECTION: 9.2 TOPIC: SIDE EFFECTS TYPE: PROBLEMS 27. The return on which one of the following is used as the risk-free rate of return? A. long-term corporate bonds B. long-term government bonds C. U.S. Treasury bills D. the Consumer Price Index E. short-term corporate bonds BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 010 #28 SECTION: 10.3 TOPIC: RISK-FREE RATE TYPE: CONCEPTS
28. Which of the following will increase the profit margin of a firm, all else constant? I. increasing depreciation II. decreasing cost of goods sold III. decreasing the tax rate IV. increasing interest expense BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 003 #22 SECTION: 3.2 TOPIC: PROFIT MARGIN TYPE: CONCEPTS

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