MIDTERM 1

You want to have $30,000 saved 5 years from now to buy a house. How much less do you have to deposit today to reach this goal if you can earn 3.5 percent rather than 2.5 percent on your savings? Today's deposit is the only deposit you will make to this savings account. Multiple Choice $1,124.60 $1,219.02 $945.11 $1,256.43 $891.18

$1,256.43

You borrowed $185,000 for 30 years to buy a house. The interest rate is 4.35 percent, compounded monthly. If you pay all of your monthly payments as agreed, how much total interest will you pay on this mortgage? A. $150,408 B. $147,027 C. $146,542 D. $153, 319 E. $141,406

$146,542.65

A proposed project has cash flows of $2,000, $?, $1,750, and $1,250 at the end of Years 1 to 4. The discount rate is 7.2 percent and the present value of the four cash flows is $6,669.25. What is the value of the Year 2 cash flow? A. $2,500 B. $2,750 C. $2,450 D. $2,800

$2,800

You will receive $15,000 in two years when you graduate. You plan to invest this at an annual interest rate of 6.5 percent, compounded annually. How much money will you have 8 years from now? $21,887.13 $24,824.94 $23,209.19 $19,381.16

$21,887.13

You want to start a business that you believe can produce cash flows of $44,000,$61,000, and $80,000 at the end of each of the next three years, respectively. At the end of three years you think you can sell the business for $200,000. At a discount rate of 9.7 percent, what is this business worth today? A. $302,897 B. $291,636 C. $350,957 D. $151,397 E. $508,254

$302,897

You just settled an insurance claim that calls for increasing payments over a 10-year period. The first payment will be paid one year from now in the amount of $5,000. The following payments will increase by 3.5 percent annually. What is the value of this settlement to you today if you can earn 6.5 percent on your investments? A. $42,035.05 B. $36,408.28 C. $34,141.14 D. $41,422.89

$41,422.89

Island News purchased a piece of property for $2 million. The firm paid a down payment of 20 percent in cash and financed the balance. The loan terms require monthly payments for 25 years at an APR of 5.5 percent compounded monthly. What is the amount of each mortgage payment? A. $9,253.92 B. $12,281.75 C. $88,000.01 D. $67,833.07 E. $9,825.40

$9,825.40

you want to be a millionaire when you retire in 30 years and expert to earn 8.5 percent, compounded monthly. how much more will you have to save each month if you wait 10 years to start saving versus if you start saving at the end of this month? A. $947.22 B. $1,046.80 C. $808.47 D. $841.15 E. $989.10

$989.10

A firm has 160,000 shares of stock outstanding, sales of $1.94 million, net income of $126,400, a price-earnings ratio of 21.3, and a book value per share of $7.92. What is the market-to-book ratio? Multiple Choice 1.39 1.84 2.69 2.12 2.45

2.12

digital movement has a 9 percent return on assets and a 75 percent dividend payout ratio. What is the internal growth rate? A. 3.24% B. 4.05% C. 3.97% D. 2.30%

2.30%

Based on the tax table below, what is the average tax rate for a sole proprietor with taxable income of $155,000? Ignore any standard or itemized deductions. A. 10.76% B. 20.18% C. 24% D. 16.26%

20.18%

Castaneda Accounting has sales of $332,700, cost of goods sold of $221,800, inventory $13,700, accounts receivable of $22,400, and accounts payable of $11,900. How many days of sales are in receivables? 48.53 days 19.58 days 24.57 days 22.55 day 14.85 days

24.57 days

On your tenth birthday, you received $300 which you invested at 4.5 percent interest, compounded annually. Your investment is now worth $756. How old are you today? A. AGE 20 B. AGE 31 C. AGE 30 D. AGE 21

31

Assume the total cost of a college education will be $245,000 when your child enters college in 15 years. You presently have $108,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college education A. 5.50% B. 5.61% C. 6.25% D. 6.81%

5.61%

What is the EAR If a bank charges you an APR of 765 percent, compounded quarterly? Multiple Choice 7.91 percent 8.38 percent 8.02 percent 787 percent 8.11 percent A. 7.91% B. 8.38% C. 8.02% D. 7.87%

7.87%

Ultimately, the ______ control(s) the corporation. A. chair of board B. shareholders C. chief executive officer D. Chief operating officer

shareholders

Your credit card company charges you 1.15 percent per month. What is the annual percentage rate on your account? a.10.85 percent b.9.93 percent c.13.80 percent d.12.86 percent e.9.70 percent

13.8%

An interest rate on a loan that is compounded monthly but expressed as an annual rate would be an example of which one of the following rates? A. Stated B. discounted annual C. effective annual D. periodic monthly

Effective annual rate.

Olivares, Incorporated, bonds mature in 17 years and have a coupon rate of 5.4 percent. If the market rate of interest increases, then the: A. coupon rate will also increase B. current yield will decrease C. yield to maturity will be less than the coupon rate D. market price of the bond will decrease E. coupon payment will increase

Market price of the bond will decrease

A _______ has all the respective rights and privileges of a legal person A. sole proprietorship B. General partnership C. limited partnership D. corporation

corporation