Autorola plans to invest money today at an interest rate of 6% compounded annually to have $40,000 available for the purchase of a car four years from now. How much does the firm need to invest today? A) $50,499.08 B) $36,384.52 C) $31,683.75 D) $9,143.66 ANSWER C Explanation: C) Via Calculator: N = […]
Date: September 19th, 2020
Given the anticipated rate of inflation (i) of 2.13% and the real rate of interest (R) of 3.1%, find the nominal rate of interest (r). What will be an ideal response? ANSWER r = R + i + Ri r = .031 + .0213 + (.031 )(.0213 ) r = .0523 + .0006603 […]
Date: September 19th, 2020
Which of the following represents the most likely order from those who is likely to need insurance the most to who is most likely to need it the least? A) Adult with child, retired with spouse, young child B) Young child, retired with spouse, adult with child C) Retired with spouse, adult with child, young […]
Date: September 19th, 2020
A retirement home in Florida costs $200,000 today. Housing prices in Florida are increasing at a rate of 4% per year. Joe wants to buy the home in 8 years when he retires. Joe has $25,000 right now in a savings account paying 8% interest per year. Joe wants to make eight equal annual deposits […]
Date: September 19th, 2020
An investor with a required return of 8% for stock A will purchase stock A if the expected return for stock A is less than or equal to 8%. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Explain the differences between an S-corporation and a C corporation. What will be an ideal response? ANSWER S corporations are limited to a maximum of 100 employees and they have the advantage of single taxation as the personal rate rather than taxing both the corporation and the individual.
Date: September 19th, 2020
The Mark IV Fund had a rate of return of 21% last year. If its beta weight was +1.5 and if the return on the overall market was 12%, its risk adjusted rate of return, RAROR, is A) +19.5%. B) – 3.0%. C) +23.0%. D) + 2.0%. ANSWER D
Date: September 19th, 2020
Assume that a firm issues a six-month note to purchase inventory. Which of the following is true if the current ratio before the purchase is 1.0? A) The firm’s current ratio must decrease. B) The firm’s current ratio will increase. C) The firm’s quick ratio might decrease. D) The firm’s quick ratio will stay the […]
Date: September 19th, 2020
A temporary parking place for cash means holding liquid assets until the investment environment for long-term assets improves. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following statements regarding firms and value is NOT true? A) We can create value by taking on negative net present value projects. B) Shareholder control in and of itself has value. C) Value is ultimately what someone is willing to pay for a firm. D) It is important to know what is […]
Date: September 19th, 2020
