1. It will cost $6,000 to acquire materials for a project. CF's are expected to be $3,600 a year for three years. What is the payback period?

A. 1.48 years

B. 1.67 years

C. 1.82 years

D. 1.95 years

E. 2.00 years

2. Project cash-flows are: cost: 200 year 1: 110 year 2: 121 discount rate is 10%. Find the NPV

A. -35

B. 0

C. 30

D. 35

E. 55

3. What is the PI for that project?

A. -1

B. 0

C. 1

D. 2

E. 1.21

4. Still regarding the above project, what is the IRR?

A. 1%

B. 2%

C. 5%

D. 8%

E. 10%

5. Regarding the same above project, consider this year 1 number, 110. What is this 110?

A. S-C

B. PCF

C. Expected value of S-C

D. Expected value of PCF

7. A project's average net income divided by its average book value is referred to as the project's average:

A. net present value.

B. internal rate of return.

C. accounting return.

D. profitability index.

E. payback period.

8. What is the future value of $7,189 invested for 23 years at 9.25 percent compounded annually?

A. $22,483.60

B. $27,890.87

C. $38,991.07

D. $51,009.13

E. $54,999.88

9. You just won the grand prize in a national writing contest! As your prize, you will receive $2,000 a month for ten years. If you can earn 7 percent per year, compounded monthly, what is this prize worth to you today?

A. $172,252.71

B. $178,411.06

C. $181,338.40

D. $185,333.33

E. $190,450.25

10. When you retire, you would like to be able to spend $50,000 per year for 25 years. Assume that you are currently 40 years from retirement and have $5,000 invested in a bank account that returns 6% per year. You also plan on making additional contributions to that account each year (starting 1 year from now) until your retirement date. How much do you need to contribute each year in order to meet your retirement goal?

t=0 t=1 t=2 .... t=40 t=41 .... t=65

5k Pmt Pmt Pmt -50k -50k

Retire

A. 11,043.49

B. 8,076.92

C. 3,797.70

D. 7,595.40

E. 3,843.43

A. 1.48 years

B. 1.67 years

C. 1.82 years

D. 1.95 years

E. 2.00 years

2. Project cash-flows are: cost: 200 year 1: 110 year 2: 121 discount rate is 10%. Find the NPV

A. -35

B. 0

C. 30

D. 35

E. 55

3. What is the PI for that project?

A. -1

B. 0

C. 1

D. 2

E. 1.21

4. Still regarding the above project, what is the IRR?

A. 1%

B. 2%

C. 5%

D. 8%

E. 10%

5. Regarding the same above project, consider this year 1 number, 110. What is this 110?

A. S-C

B. PCF

C. Expected value of S-C

D. Expected value of PCF

7. A project's average net income divided by its average book value is referred to as the project's average:

A. net present value.

B. internal rate of return.

C. accounting return.

D. profitability index.

E. payback period.

8. What is the future value of $7,189 invested for 23 years at 9.25 percent compounded annually?

A. $22,483.60

B. $27,890.87

C. $38,991.07

D. $51,009.13

E. $54,999.88

9. You just won the grand prize in a national writing contest! As your prize, you will receive $2,000 a month for ten years. If you can earn 7 percent per year, compounded monthly, what is this prize worth to you today?

A. $172,252.71

B. $178,411.06

C. $181,338.40

D. $185,333.33

E. $190,450.25

10. When you retire, you would like to be able to spend $50,000 per year for 25 years. Assume that you are currently 40 years from retirement and have $5,000 invested in a bank account that returns 6% per year. You also plan on making additional contributions to that account each year (starting 1 year from now) until your retirement date. How much do you need to contribute each year in order to meet your retirement goal?

t=0 t=1 t=2 .... t=40 t=41 .... t=65

5k Pmt Pmt Pmt -50k -50k

Retire

A. 11,043.49

B. 8,076.92

C. 3,797.70

D. 7,595.40

E. 3,843.43

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