Exam2 FIN370 A Key (1)

# You can deposit 850 today into a savings account how

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43. You can deposit \$850 today into a savings account. How long must you wait for the investment to grow to \$5,000 if you can earn 6 percent on this money? A. 30.41 years B. 23.81 years C. 59.95 years D. 22.63 years E. 31.45 years BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #53 SECTION: 4.3 TOPIC: TIME PERIOD TYPE: PROBLEMS

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44. A lender would prefer a borrower have which one of the following sets of ratios? BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 003 #23 SECTION: 3.2 TOPIC: LONG-TERM SOLVENCY TYPE: CONCEPTS 45. Kimberly is considering an investment of \$2,000 each year for 15 years. The investment will pay 8 percent interest. How much will this investment be worth at the end of the 15 years? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 005 #66 SECTION: 5.2 TOPIC: ANNUITY FUTURE VALUE TYPE: PROBLEMS 46. Given an interest rate of zero percent, the future value of a lump sum invested today will always: BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #15 SECTION: 4.1 TOPIC: FUTURE VALUE TYPE: CONCEPTS
47. The Turner Co. has one bond issue outstanding. An indenture provision prohibits the firm from redeeming the bonds during the first two years. This provision is referred to as a _____ provision. A. deferred call B. liquidity C. debenture D. sinking fund E. market BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 006 #15 SECTION: 6.2 TOPIC: DEFERRED CALL PROVISION TYPE: DEFINITIONS 48. Callaway, Inc. needs \$2.3 million 6 years from now to purchase a machine. Currently, the firm has some extra cash and would like to establish a savings account for this purpose. The account pays 4 percent interest, compounded annually. How much money must the company deposit today to fully fund the machine purchase? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #46 SECTION: 4.2 TOPIC: PRESENT VALUE TYPE: PROBLEMS

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