fin 301 final

You should not apply the IRR rule in this case.

An investment costs $239,000 and has projected cash flows of $123,900, $78,400, and −$22,300 for Years 1 to 3, respectively. The required rate of return is 15.5 percent. Based solely on the internal rate of return rule, should you accept the project? Why or why not?

increases at a decreasing rate.

As a bond's time to maturity increases, the bond's sensitivity to interest rate risk:

Yield to maturity < Coupon rate

Assume the current market price of a bond exceeds its par value. Which one of these equations applies?

Average Collection Period = 365 / (2430000/246000) = 36.9506173 (36.95 days)

Corner Supply has a current accounts receivable balance of $246,000. Credit sales for the year just ended were $2,430,000. How many days, on average, did it take for credit customers to pay off their accounts during this past year?

source of $19,100 of cash as an operating activity. (change in accts payable)

During the year, the accounts payable of a company rose from $115,200 to $134,300. This change represents a:

Equivalent annual cost

Machlab Equipment is comparing three machines to determine which one to purchase. Each machine has a unique price, annual operating cost, and life span. Which one of the following computational methods should Machlab use as the basis for its decision?

yield to maturity.

The bond market requires a return of 6.2 percent on the 15-year bonds issued by Mingwei Manufacturing. The 6.2 percent is referred to as the:

Accounts Receivable

Which one of the following accounts is the most liquid?

3-year; 6 percent coupon

Which one of the following bonds is the least sensitive to interest rate risk?

increase

Your aunt has promised to give you $5,000 when you graduate from college. You expect to graduate three years from now. If you speed up your plans to enable you to graduate two years from now, the present value of the promised gift will:

$148,000(1 − .2 − .32)

Zhu Pediatrics just spent $148,000 to purchase some MACRS five-year property. The MACRS rates are .2, .32, and .192 for Years 1 to 3, respectively. Assume the firm opted to forego any bonus depreciation. Which one of the following will correctly give you the book value of this equipment at the end of Year 2?