1283 words - 6 pages

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¬rmâ€™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 reï¬‚ect when cash ï¬‚ows occur.

c) different because of GAAP rules regarding the recognition of income.

d) different because cash inï¬‚ows 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...

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