Costs and prices regularly fall every year in the microcomputer industry. Briefly indicate
your recommendation and rationale for an inventory method for a firm about to enter this
industry.
Selecting an inventory method that provides tax minimization and

Graded Assignment 03 and 03x Problems
1. Allysha just borrowed $44,400. She plans to repay this loan by making a special payment
of $5,500 in 3 years and by making regular annual payments of $6,400 per year until the
loan is paid off. If the interest rate

FNAN 301 Extra problems risk and return
1. Over the past 4 years, Duke Property stock had returns of 16.0%, 13.0%, 7.0%, and -26.0% and Princess
Property stock had returns of 21.0%, 5.0%, 0.0%, and -18.0%.
a. What was the arithmetic mean return of Duke Pr

of money part 2 - 1
FNAN 301
Financial Management
Time value of money
Part 2
of money part 2 - 2
Topics Covered
Multiple cash flows
Present
value
General patterns, perpetuities, ordinary annuities, annuities
due, and delayed perpetuities and annuities

FNAN 301
Solutions to test bank problems stocks
Some answers may be slightly different than provided solutions due to rounding
1. Driver Corporation has issued bonds, common stock, and preferred stock. Rank the
following in terms of their priority on Driv

FNAN 301, Spring 2011, quiz 1, solutions
Conceptual: effect of rate and time on future value
1. For each of the 4 investments described in the table, the investor would pay $500 today to purchase the
investment. Each investment would have the annual retur

Suppose that the demand curve for corn is downward-sloping but that the supply curve is
perfectly price inelastic at a quantity of Q* once the corn is harvested. Furthermore,
assume that the equilibrium price is $5 per bushel.
A. If the U.S. government de

FNAN 301
Test bank problems risk and return
1. A stock had returns of 9.0%, 3.0%, -7.0%, and 7.0% over the past four years.
a. What was the arithmetic mean annual return?
b. What was the compound annual return?
2. A stock had returns of 5%, 8%, -3%, 10%,

1. Quality Real Estate owns a skyscraper that is expected to produce cash flows of $10 million in 1 year, $15 million in 2 years,
and $220 million in 3 years, when it is expected to be sold. The cost of capital for the building is 15.0%. What is the value

Quiz#2TakehomeDueOctober4,2011
1. If the price of a gallon of gasoline was 28 cents in 1965 and 32 cents in 1969, then
the:
A. nominal price increased, but we cant tell the real price unless we know what
happened to the prices of other goods
B. nominal pr

FNAN 301
Solutions to test bank problems capital budgeting criteria
Some answers may be slightly different than provided solutions due to rounding
1. What is the NPV of project A if it has the following expected cash flows and the cost of
capital for proj

FNAN 301
Extra problems time value of money part 1
1. Silvio just invested $6,200 for 12 years and will earn compound interest of 7.6 percent per year.
Renaldo just invested $7,600 for 12 years and will earn simple interest of 8.0 percent per year.
a. Who

FNAN 301
Extra problems time value of money part 2
1. Quality Real Estate owns a skyscraper that is expected to produce cash flows of $10 million in 1 year, $15 million in 2
years, and $220 million in 3 years, when it is expected to be sold. The cost of c

FNAN 301
Solutions to extra problems on corporate financial management
1. Milan Office Supplies, Inc. (MOS) is a fairly large firm that does not have a chief financial
officer. A large investor that owns many shares of MOS stock visits the firm to discuss

FNAN 301
Extra problems on corporate financial management
1. Milan Office Supplies, Inc. (MOS) is a fairly large firm that does not have a chief financial
officer. A large investor that owns many shares of MOS stock visits the firm to discuss the
company

FNAN 301
Solutions to test bank problems capital budgeting criteria
Some answers may be slightly different than provided solutions due to rounding
1. What is the NPV of project A if it has the following expected cash flows and the cost of
capital for proj

FNAN 301
Solutions to test bank problems cost of capital
Some answers may be slightly different than provided solutions due to rounding
1. Last Stand Corp. has 700,000 shares of common equity outstanding that have an expected return of
16.00% and a curren

Syllabus: FNAN 301 (Financial Management), Spring 2012
Updated January 24, 2012
Course coordinator:
Dr. Steven Pilloff
Professor:
Office:
Email:
Phone:
Office hours:
Dr. Steven Pilloff
224 Enterprise Hall
[email protected]
703-993-5058
M: 9:00 a.m. 11:00 a

FNAN 301 Formulas and Notes (p. 1 of 6)
Value in t periods with simple interest:
C0 [1 + (simple interest rate per period t)] = C0 + (C0 simple interest rate per period t)
FVt = C0 (1+r)t
Financial calculator: In either BEGIN or END mode, FV is the future

FNAN 301
Solutions to test bank problems risk and return
Some answers may be slightly different than provided solutions due to rounding
1. A stock had returns of 9.0%, 3.0%, -7.0%, and 7.0% over the past four years.
a. What was the arithmetic mean annual

FNAN 301
Solutions to test bank problems relevant cash flows and NPV analysis
Some answers may be slightly different than provided solutions due to rounding
1. Blizzard Inc. is evaluating a 1-year project that would involve an initial investment of $1,000

FNAN 301
Solutions to test bank problems stocks
Some answers may be slightly different than provided solutions due to rounding
1. Driver Corporation has issued bonds, common stock, and preferred stock. Rank the
following in terms of their priority on Driv

FNAN 301
Solutions to test bank problems time value of money part 1
Some answers may be slightly different than provided solutions due to rounding
1. How much will you have in
a. 16 years if you invest $500 today at an annual rate of 5.6%?
b. 18 years if

FNAN 301
Solutions to test bank problems time value of money part 2
Some answers may be slightly different than provided solutions due to rounding
1. Quality Real Estate owns a skyscraper that is expected to produce cash flows of $10 million in 1 year,
$1

FNAN 301
Extra problems bonds
1. On Monday, 20,000 bonds were issued by Brooks Books were bought by a variety of investors for $1,000 per bond.
Brooks Books received $20 million from the sale of these bonds. Were the 20,000 bonds more likely sold on the p

FNAN 301
Extra problems stocks
1. Driver Corporation has issued bonds, common stock, and preferred stock. Rank the following in terms of
their priority on Drivers cash flows from highest to lowest: bondholders, common shareholders, and preferred
sharehold

FNAN 301
Solutions to extra problems bonds
1. On Monday, 20,000 bonds were issued by Brooks Books were bought by a variety of investors for
$1,000 per bond. Brooks Books received $20 million from the sale of these bonds. Were the 20,000
bonds more likely

Stock value increases
when grow rate increases
When expected return decreases.
Dividend grows at g forever => stocks price grows at g [stocks expected capital appreciation
yield]
Riskier higher cost of capital lower NPV

FNAN 301
Solutions to test bank problems risk and return
Some answers may be slightly different than provided solutions due to rounding
1. A stock had returns of 9.0%, 3.0%, -7.0%, and 7.0% over the past four years.
a. What was the arithmetic mean annual

FNAN 301
Solutions to test bank problems cost of capital
Some answers may be slightly different than provided solutions due to rounding
1. Last Stand Corp. has 700,000 shares of common equity outstanding that have an expected return of
16.00%, an expected

FNAN 301/303, Fall 2016, test 2, version B, solutions
1. Sarah just borrowed $23,100 from the bank. She plans to repay this loan by making equal
quarterly payments for 20 quarters. If the interest rate on the loan is 14.80 percent per year and
she makes h

FNAN 301/303, Fall 2016, test 1, version D, solutions
1. What is the value of a recording studio that is expected to generate no cash flows for several
years and then generate fixed annual cash flows of $57,100 per year forever if the first annual
$57,100

FNAN 301/303, Fall 2016, test 3, version D, solutions
1. The following table presents information on a potential project currently being evaluated by
Graham Construction. Which one of the assertions about statement 1 and statement 2 is true?
Expected cash