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If the present value of $1.00 received n years from today at an interest rate of r is
0.3855, then what is the future value of $1.00 invested today at an interest rate of r% for
n years?
A. $1.3855
B. $2.594
C. $1.70
D. Not enough information to solve the problem
The survey of CFOs indicates that NPV method is always, or almost always, used for
evaluating investment projects by:
A. 12% of firms
B. 20% of firms
C. 57% of firms
D. 75% of firms
Given the following data: EBIT = 400; Tax = 100; Sales = 3000; Average Total Assets =
1500, calculate net profit margin:
A. 10%
B. 18.3%
C. 7.5%
D. None of the above
If the 3-year spot rate is 10.5% and the 2-year spot rate is 10%, what is the one-year
forward rate of interest two years from now?
A. 3.7%
B. 9.5%
C. 11.5%
D. None of the above
According to Strategy B, a firm would:
A. Maintain a high ratio of current assets to sales.
B. Use low or no short-term debt and more long-term financing.
C. Use more short-term debt and less long-term financing.
D. Be a short-term lender during a part of the year and a borrower during the rest.
A firm has a debt-to-equity ratio of 1. Its cost of equity is 16%, and its cost of debt is
8%. If the corporate tax rate is 25%, what would its cost of equity be if the
debt-to-equity-ratio were 0?
A. 12.57%
B. 13.83%
C. 16.00%
D. None of the above
