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# 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?

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

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