You plan to buy a car in one year. It will cost $15,000 at that time. You now have
$5,000 in a bank that pays 12% compounded monthly. You will save for the car by
making monthly deposits in the bank for the next 12 months. How much will you have
to deposit each month to have enough money in total to make the purchase?
A.$738.50
B.$835.18
C.$769.43
D.$682.80
You are going to place an order with a new supplier. You have been offered terms of
2/10 net 60 from the date your supplies are shipped. The cost of borrowing from your
bank is 16 percent (annual rate). What is the best course of action in paying the
supplier?
A.Pay as soon as you receive supplies.
B.Pay on the 10th day after receiving supplies.
C.Pay on the 11th day after receiving supplies.
D.Pay on the 60th day after receiving supplies.
Solving the debt/interest problem using an iterative, numerical approach begins with
taking a guess at:
A.ending debt.
B.beginning debt.
C.interest.
D.equity.
A cash flow projected today for a specific period of time is a:
A.present value of a single sum.
B.future value of a single sum.
C.present value of an annuity.
D.future value of an annuity.
Which of the following account changes would reduce a firm’s net working capital if all
other account balances are held constant?
A.Increase in inventories
B.Increase in accounts payable
C.Decrease in accounts receivable
D.b and c
E.None of the above
Exchange rate risk in an international transaction represents uncertainty about:
A.the level of foreign currency cash flows to be generated by the transaction.
B.the level of U.S. dollar cash flows to be realized from a transaction requiring
immediate cash settlement.
C.the level of U.S. dollar cash flows to be realized from a transaction involving
deferred payment.
D.a and c
E.All of the above
The sensitivity/scenario analysis:
A.provides a quantitative measure of project risk.
B.requires as input a probability distribution for each variable affecting project NPV.
C.indicates the variability of project NPV with fluctuations in the value of variables.
D.All of the above
E.None of the above
The cost of capital is:
A.the average return on investments.
B.the average rate paid for the use of investors’ money.
C.used primarily in projecting financial statements.
D.Both b & c
E.All of the above
If the Edins Company has a 7 3/4% bond that matures in 20 years, what will be its value
if the yield to maturity is 6 percent?
A.$1,888.91
B.$1,200.71
C.$1,202.25
D.$1,077.50
Five units of Country C€s currency (call it €c€) can be exchanged for four units of
Country D€s currency (call it €d€). What is the direct quote in Country C?
A.5 c : 4 d
B.1.25 c : 1 d
C.1 c : 0.80 d
D.1 c : 1.25 d
You are considering buying a new car. The sticker price is $15,000 and you have $2,000
to put toward a down payment. If you can negotiate a nominal annual interest rate of
10% and you wish to pay for the car over a 5-year period, what are your monthly car
payments?
A.$216.67
B.$252.34
C.$276.21
D.$285.78
E.$318.71