1. Which one of the following is defined as a firm's short-term assets and its short-term liabilities?

a. working capital

b. debt

c. investment capital

d. net capital

e. capital structure

2. Thomas invests $105 in an account that pays 5 percent simple interest. How much money will Thomas have at the end of 5 years?

a. $131.25

b. $127.63

c. $134.01

d. $126.00

e. $136.50

3. What is the future value of $3,018 invested for 8 years at 5.4 percent compounded annually?

a. $4,596.68

b. $3,724.62

c. $3,734.93

d. $6,855.47

e. $7,001.14

4. For each of the following, compute the future value (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)):

Present Value Years Interest Rate Future Value

$ 2,050 12 12 % $

8,352 6 10

72,355 13 11

179,796 7 7

5. For each of the following, compute the present value (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)):

Present Value Years Interest Rate Future value

$

14 8 % $ 14,551

5 14 42,557

30 15 877,073

6. Solve for the unknown interest rate in each of the following (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)):

Present Value Years Interest Rate Future Value

$ 340 5 %

$ 465

460 19

1,752

49,000 20

303,726

48,261 30

1,485,098

7. In 1895, the first a sporting event was held. The winner's prize money was $130. In 2007, the winner's check was $1,173,000. (Do not round your intermediate calculations.)

a. What was the percentage increase per year in the winner's check over this period?

a) 8.37

b) 8.57

c) 8.47

d) -24.12

e) 8.52

b. If the winner's prize increases at the same rate, what will it be in 2040?

a) 17,430,895.58

b) 130.00

c) 17,697,884.24

d) 17,167,814.42

e) 16,653,153.67

8. Some time ago, Julie purchased eleven acres of land costing $36,900. Today, that land is valued at $214,800. How long has she owned this land if the price of the land has been increasing at 6 percent per year?

a. 28.33 years

b. 29.98 years

c. 30.23 years

d. 31.29 years

e. 32.08 years

9. Imprudential, Inc. has an unfunded pension liability of $850 million that must be paid in 25 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. The relevant discount rate is 6.5 percent. What is the present value of this liability?

a. $159,803,162

b. $171,438,907

c. $176,067,311

d. $184,519,484

e. $191,511,367

10. Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, a sculpture was sold at auction for a price of $10,313,500. Unfortunately for the previous owner, he had purchased it in 1999 at a price of $12,385,500. What was his annual rate of return on this sculpture?

a.

b. -4.47%

c. -3.80%

d. -5.06%

e. 4.68%

11. You invested $1,400 in an account that pays 5 percent simple interest. How much more could you have earned over a 20-year period if the interest had compounded annually?

a. $749.22

b. $830.11

c. $882.19

d. $901.15

e. $914.62

12. You have just received notification that you have won the $3.0 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you're around to collect), 68 years from now. What is the present value of your windfall if the appropriate discount rate is 10 percent?

a. $4,504.48

b. $16,750.53

c. $4,228.70

d. $4,688.34

e. $4,596.41

13. What is the future value of $6,200 invested for 23 years at 9.25 percent compounded annually?

a. $22,483.60

b. $27,890.87

c. $38,991.07

d. $41,009.13

e. $47,433.47

14. What is the future value of $800 in 17 years assuming an interest rate of 13 percent compounded semiannually?

a. $6,466.96

b. $1,007.99

c. $6,388.86

d. $6,807.33

e. $1,164.86

a. working capital

b. debt

c. investment capital

d. net capital

e. capital structure

2. Thomas invests $105 in an account that pays 5 percent simple interest. How much money will Thomas have at the end of 5 years?

a. $131.25

b. $127.63

c. $134.01

d. $126.00

e. $136.50

3. What is the future value of $3,018 invested for 8 years at 5.4 percent compounded annually?

a. $4,596.68

b. $3,724.62

c. $3,734.93

d. $6,855.47

e. $7,001.14

4. For each of the following, compute the future value (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)):

Present Value Years Interest Rate Future Value

$ 2,050 12 12 % $

8,352 6 10

72,355 13 11

179,796 7 7

5. For each of the following, compute the present value (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)):

Present Value Years Interest Rate Future value

$

14 8 % $ 14,551

5 14 42,557

30 15 877,073

6. Solve for the unknown interest rate in each of the following (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)):

Present Value Years Interest Rate Future Value

$ 340 5 %

$ 465

460 19

1,752

49,000 20

303,726

48,261 30

1,485,098

7. In 1895, the first a sporting event was held. The winner's prize money was $130. In 2007, the winner's check was $1,173,000. (Do not round your intermediate calculations.)

a. What was the percentage increase per year in the winner's check over this period?

a) 8.37

b) 8.57

c) 8.47

d) -24.12

e) 8.52

b. If the winner's prize increases at the same rate, what will it be in 2040?

a) 17,430,895.58

b) 130.00

c) 17,697,884.24

d) 17,167,814.42

e) 16,653,153.67

8. Some time ago, Julie purchased eleven acres of land costing $36,900. Today, that land is valued at $214,800. How long has she owned this land if the price of the land has been increasing at 6 percent per year?

a. 28.33 years

b. 29.98 years

c. 30.23 years

d. 31.29 years

e. 32.08 years

9. Imprudential, Inc. has an unfunded pension liability of $850 million that must be paid in 25 years. To assess the value of the firm's stock, financial analysts want to discount this liability back to the present. The relevant discount rate is 6.5 percent. What is the present value of this liability?

a. $159,803,162

b. $171,438,907

c. $176,067,311

d. $184,519,484

e. $191,511,367

10. Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, a sculpture was sold at auction for a price of $10,313,500. Unfortunately for the previous owner, he had purchased it in 1999 at a price of $12,385,500. What was his annual rate of return on this sculpture?

a.

b. -4.47%

c. -3.80%

d. -5.06%

e. 4.68%

11. You invested $1,400 in an account that pays 5 percent simple interest. How much more could you have earned over a 20-year period if the interest had compounded annually?

a. $749.22

b. $830.11

c. $882.19

d. $901.15

e. $914.62

12. You have just received notification that you have won the $3.0 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you're around to collect), 68 years from now. What is the present value of your windfall if the appropriate discount rate is 10 percent?

a. $4,504.48

b. $16,750.53

c. $4,228.70

d. $4,688.34

e. $4,596.41

13. What is the future value of $6,200 invested for 23 years at 9.25 percent compounded annually?

a. $22,483.60

b. $27,890.87

c. $38,991.07

d. $41,009.13

e. $47,433.47

14. What is the future value of $800 in 17 years assuming an interest rate of 13 percent compounded semiannually?

a. $6,466.96

b. $1,007.99

c. $6,388.86

d. $6,807.33

e. $1,164.86

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