Suppose that in 2010, a $10 silver certificate from 1898 sold for $11,200. For this to
have been true, what would the annual increase in the value of the certificate have
been?
A. 6.47 percent
B. 6.81 percent
C. 7.23 percent
D. 7.49 percent
E. 7.97 percent
Billingsley, Inc. is borrowing $60,000 for five years at an APR of 8 percent. The
principal is to be repaid in equal annual payments over the life of the loan with interest
paid annually. Payments will be made at the end of each year. What is the total payment
due for year 3 of this loan?
A. $13,920
B. $14,880
C. $15,220
D. $15,840
E. $16,800
How are checks that are deposited into a typical lockbox handled?
A. The checks are deposited into a local bank which then overnights one check for the
entire amount to the firm.
B. The checks are collected once a day, normally in the early morning, by a bank
employee.
C. The checks are posted to the customers account prior to being deposited.
D. The checks are collected throughout the day and immediately deposited into the
firms account.
E. The checks are collected and sent overnight to the firms main office for processing.
Sand Mountain Resort has a 45 percent tax rate. Its total interest payment for the year
just ended was $6.8 million. What is the interest tax shield?
A. $3,006,500
B. $3,060,000
C. $3,410,600
D. $3,525,000
E. $3,618,000
Green Earths monthly purchases are equal to 70 percent of the following months sales.
The accounts payable period for purchases is 30 days. All other expenses are paid when
incurred. Assume each month has 30 days and August sales are $18,500. The company
has compiled the following information.
What is the projected amount of disbursements for the month of July?
A. $13,910
B. $14,550
C. $16,100
D. $16,430
E. $16,760
Quattro, Inc. has the following mutually exclusive projects available. The company has
historically used a four-year cutoff for projects. The required return is 11 percent.
The payback for Project A is
____ while the payback for Project B is ____.
The NPV for Project A is _____ while the NPV for Project B is ____.
Which project, if any, should the company accept?A. 3.92 years; 3.64 years; $780.85;
$1,211.48; accept both Project A and B
B. 3.92 years; 3.79 years; -$211.60; $1,211.48; accept Project B only
C. 3.92 years; 3.79 years; $780.85; -$7,945.93; accept Project A only
D. 4.06 years; 3.64 years; $780.85; $1,211.48; accept both Project A and B
E. 4.06 years; 3.79 years; -$211.60; -$7,945.93; reject both projects
The Green Mile has the following estimated quarterly sales for next year.
The accounts receivable period is 45 days. What is the expected accounts receivable
balance at the end of the third quarter? Assume each month has 30 days.
A. $4,300
B. $4,750
C. $5,600
D. $6,667
E. $8,600
Which one of the following bonds is the least sensitive to changes in market interest
rates?
A. Zero coupon, 10 year
B. 6 percent annual coupon, 10 year
C. Zero coupon, 4 year
D. 8 percent annual coupon, 4 year
E. 6 percent annual coupon, 4 year
A corporation:
A. is ultimately controlled by its board of directors.
B. is a legal entity separate from its owners.
C. is prohibited from entering into contractual agreements.
D. has its identity defined by its bylaws.
E. has its existence regulated by the rules set forth in its charter.
The Bethlehem Inn is an all-equity firm with 18,000 shares outstanding at a value per
share of $14.50. The firm is issuing $50,000 of debt and using the proceeds to reduce
the number of outstanding shares. How many shares of stock will be outstanding once
the debt is issued? Ignore taxes.
A. 11,970 shares
B. 14,552 shares
C. 14,846 shares
D. 15,030 shares
E. 15,561 shares
Lester lent money to The Corner Store by purchasing bonds issued by the store. The
rate of return that he and the other lenders require is referred to as the:
A. pure play cost.
B. cost of debt.
C. weighted average cost of capital.
D. subjective cost.
E. cost of equity.