Andre’s wonderful parents established a college savings plan for him when he was born. They deposited $50 into the account on the last day of each month. The account has earned 10.9% compounded monthly, tax-free. How much can they withdraw on his 18th birthday to spend on his education? A) $43,730 B) $30,028 C) $33,307 […]
The weighted average cost of capital is estimated as Kc = wdKd + wpKp + weKe, where the w’s represent the weights. The weights must sum to more than one so that the manager can then subtract taxes from the equation. Indicate whether the statement is true or false ANSWER FALSE
If Cindy deposits $12,000 into a bank account that pays 6% interest compounded semiannually, what will the account balance be in seven years? A) 16,987 B) 18,151 C) 15,555 D) 14,356 ANSWER B
You cannot be denied credit because of your marital status. Indicate whether the statement is true or false ANSWER TRUE
You hold a portfolio with the following securities: Security Percent of Portfolio Beta Expected Return Able Corporation 20% 3.20 36.0% Baker Corporation 40% 1.60 20.0% Charlie Corporation 40% .20 6.0% What is the expected return for the market, according to the CAPM? A) 12.0% B) 10.0% C) 14.0% D) 13.8% ANSWER C
Michael received a professional baseball contract paying $7,000,000 for 5 years, Bert received a two-year contract for $16,000,000 per year. For purposes of calculations, treat these contracts as ordinary annuities. What are the present values of each contract if we assume a discount rate of 6%? It is not clear that the higher present value […]
The premium on a life insurance policy is A) a special service charge for monthly rather than annual payments. B) a reimbursement for previous overpayments. C) the amount paid out at death minus tax payments. D) simply the periodic amount paid to the insurance company. ANSWER D
If you want to have $3,575 in 29 months, how much money must you put in a savings account today? Assume that the savings account pays 12% and it is compounded monthly; round to nearest $1. A) $2,438 B) $3,008 C) $3,147 D) $2,679 ANSWER D
A cumulative variance is one carried over from the previous budget year. Indicate whether the statement is true or false ANSWER FALSE
Opening a retail charge account is one way of establishing a credit record. Indicate whether the statement is true or false ANSWER TRUE
