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1) what is the present value of an operating lease that involves payments of $8,000 per
year (at the end of each year) for 12 years with no possibility of purchase at the end of
the lease term. assume that the firm is in the 35% marginal tax rate and the pre-tax cost
of debt for the firm is 12%?
a.$60,918.39
b.$49,554.99
c.$39,596.96
d.$32,210.75
2) louis international is considering easing credit standards to increase sales, and
potentially profits. currently the firm sells 200,000 units at a sales price of $125 per unit
and variable cost of $103 per unit. currently the average collection period is 15 days
and the bad debt expense is 3% of sales. the required return on investment is 18%. if
credit standards are eased, the sales will increase to 250,000 units; the acp will increase
to 35 days; and the bad debt expense will increase to 5% all else will remain the same.
what is the marginal profit from increased sales?
a.$6,250,000.00
b.$1,100,000.00
c.$25,000,000.00
d.$5,150,000.00
3) narrbegin: bavarian cash transfer
bavarian sausage cash transfer
bavarian sausage needs to transfer $250,000 from its deposit account into its
concentration account. the company could do it with an edt which would cost $1.50 or a
wire transfer for $17. the wire transfer would result in the funds being deposited in the
concentration account 2 days earlier. the firms opportunity cost is 10% and we assume a
360 day year.
narrend
what is the minimum transfer amount for which the transfer would be beneficial for
bavarian sausage?
a.$55,800
b.$27,900
c.$13,850
d.$41,950
4) you have a long futures position on an asset with a settlement price of $30.00 and a
contract expiration date of 6-months from now. if the settlement price of the contact is
$30.08 tomorrow, then what cash flow will take place if you assume that the initial
margin was zero?
a.all cash settlements will take place 6-months from now
b.you will receive $.08 per contract
c.you will pay $.08 per contract
d.there is not enough information to determine
5) which of the following is not a true capital-raising event for the firm?
a.primary market transaction
b.secondary market transaction
c.initial public offering
d.a corporate loan from a bank
6) what is the value of a 15-year 10% coupon bond with a face value of $1,000. the
required return on the bond is 12% and the bond makes semiannual payments.
a.$862.35
b.$1,167.39
c.$925.76
d.$1,000
7) which of the following can be thought of as an electronic dtc?
a.wire transfer
b.automated clearinghouse debit transfer
c.concentrated banking
d.field-banking system
e.none of the above
8) narrbegin: exhibit 7-2
exhibit 7-2
narrend
given exhibit 7-2, what is the expected standard deviation?
a.957.38%
b.1058.69%
c.30.71%
d.32.54%
9) if you deposit $9,000 at the end of each year in an account earning 8% interest, what
will be the value of the account in 25 years?
a.$600,882.83
b.$657,953.46
c.$710,589.74
d.$719,589.74
10) static utility company anticipates its revenues, and consequently its common stock
dividends, will remain flat forever. it currently pays an annual dividend of $20 per year.
if it pays the next dividend exactly one year from today, then what is the price of statics
common shares if the required rate of return is 12%?
a.$24.00
b.$40.00
c.$166.67
d.$200.00
