1. A business owned by a single individual is called a:
a) corporation.
b) sole proprietorship.
c) general partnership.
d) limited partnership.
e) limited liability company.
2. The decisions made by ï¬nancial managers should all be ones which increase the:
a) size of the ï¬rm.
b) growth rate of the ï¬rm.
c) marketability of the managers.
d) market value of the existing owners' equity.
e) ï¬rm’s current sales.
3. The primary goal of ï¬nancial management is to:
a) maximize current dividends per share of the existing stock.
b) maximize the current value per share of the existing stock.
c) avoid ï¬nancial distress.
d) minimize operational costs and maximize ï¬rm ...view middle of the document...
b) the same since accounting proï¬ts reflect when cash flows occur.
c) different because of GAAP rules regarding the recognition of income.
d) different because cash inflows must occur before revenue recognition.
e) the same due to the requirements of GAAP.
8. Some time ago, Julie purchased eleven acres of land costing $15,490. Today, that land is valued at $49,957. How long has she owned this land if the price of the land has been increasing at 5 percent per year?
a) 24.00 years
b) 23.51 years
c) 24.13 years
d) 23.67 years
e) 23.72 years
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9. What is the future value of $3,088 invested for 11 years at 6.00 percent compounded annually?
a) $5,510.23
b) $5,841.06
c) $5,861.95
d) $5,882.83
e) $1,563.45
10. One year ago, you invested $3,440. Today it is worth $3,700.50. What rate of interest did you earn?
a) 7.18 percent
b) 7.57 percent
c) 7.52 percent
d) 7.50 percent
e) 7.04 percent
11. First City Bank pays 7 percent simple interest on its savings account balances, whereas Second City Bank pays 7 percent interest compounded annually.
If you made a $73,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 9 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Difference in accounts $__________
12. a. Compute the future value of $1,000 compounded annually for 20 years at 6 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Future value $__________
b. Compute the future value of $1,000 compounded annually for 15 years at 9 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Future value $__________
c. Compute the future value of $1,000 compounded annually for 25 years at 6 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Future value $__________
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13. For each of the following, compute the present value (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.):
a) Present Value Years Interest Rate Future value
b) $__________ 12 6% $ 15,651
c) $__________ 3 12 53,557
d) $__________ 28 13 888,073
e) $__________ 30 10 552,164
14. Wilkinson Co. has identified an investment project with the following cash flows:
Year Cash Flow
1 $ 880
2 1,250
3 1,510
4 1,675
If the discount rate is 8 percent, what is the present...
