Finance Chapter 2 , 3, 5, 6

You want to buy a house that costs $270,000. You will make a down payment equal to 20 percent of the price of the house and finance the remainder with a loan that has an interest rate of 5.43 percent compounded monthly. If the loan is for 30 years, what are your monthly mortgage payments?

$1,216.95

What is the future value of an annuity of $100 per year for 10 years at 10 percent

$1,593.74

You Save Bank has a unique account. If you deposit $5,250 today, the bank will pay you an annual interest rate of 4 percent for 5 years, 4.6 percent for 4 years, and 5.3 percent for 8 years. How much will you have in your account in 17 years?

$11,557.92

Assume $100 earns a stated 10 percent rate compounded quarterly. What will the value of the $100 be after one year?

$110.38

You need to have $33,250 in 20 in years. You can earn an annual interest rate of 4 percent for the first 6 years, 4.6 percent for the next 5 years, and 5.3 percent for the final 9 years. How much do you have to deposit today?

$13,184.93

Thomas invests $115 in an account that pays 6 percent simple interest. How much money will Thomas have at the end of 4 years?

$142.60

Mo will receive a perpetuity of $13,000 per year forever, while Curly will receive the same annual payment for the next 45 years. If the interest rate is 5.7 percent, how much more are Mo's payments worth?

$18,823.23

A company has a pension liability of $360,000,000 that it must pay in 21 in years. If it can earn an annual interest rate of 3.2 percent, how much must it deposit today to fund this liability?

$185,792,790.51

You need to have $25,000 for a down payment on a house 5 in years. If you can earn an annual interest rate of 4.7 percent, how much will you have to deposit today?

$19,870.40

Your grandparents put $10,700 into an account so that you would have spending money in college. You put the money into an account that will earn 4.29 percent compounded monthly. If you expect that you will be in college for 5 years, how much can you withdraw each month?

$198.46

Assuming an interest rate of 6.8 percent, what is the value of the following cash flows four years from today? YearCash Flow 1 3,350 2 4,320 3 6,235 4 8,395

$24,062.40

Marko, Inc., is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $5,400, $10,400, and $16,600 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a rate of return of 12 percent is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?

$24,927.80

Alpha Co. has interest expense of $1.2 million, total assets of $84 million, sales o $76 million, long-term debt of $16.4 million, and net income of $12.1 million. How will interest expense be recorded in the common-size income statement?

1.58%

What is the effective annual rate for an APR of 10.30 percent compounded quarterly?

10.70%

You expect to receive a payout from a trust fund in 2 years. The payout will be for $10,000. You plan to invest the money at an annual rate of 6.1 percent until the account is worth $17,500. How many years do you have to wait from today?

11.45 years

bc corporation has 1,800 shares outstanding and earned $2,700 last year on assets of $2 million and equity of $1.5 million. What is the PE ratio if the stock is currently selling at $18 per share

12 times

Maxxie purchased a tract of land for $26,000. Today, the same land is worth $56,400. How many years have passed if the price of the land has increased at an annual rate of 6.6 percent?

12.12 years

Your credit card company charges you 1.30 percent per month. What is the APR on your credit card?

15.60%

Your credit card company charges you 1.24 percent per month. What is the EAR on your credit card?

15.94%

Bob bought some land costing $15,940. Today, that same land is valued at $45,917. How long has Bob owned this land if the price of land has been increasing at 6 percent per year?

18.16 years

Rick deposited $2,700 into an account 9 years ago for an emergency fund. Today, that account is worth $4,025. What annual rate of return did Rick earn on this account assuming no other deposits and no withdrawals?

4.54 percent

When your father was born 44 years ago, his grandparents deposited $100 in an account for him. Today, that account is worth $1,100. What was the annual rate of return on this account?

5.60 percent

You have just purchased a car and, to fund the purchase, you borrowed $22,500. If your monthly payments are $430.82 for the next 5 years, what is the APR of the loan?

5.60%

a firm with a profit margin of 6.8 percent generates ______ cents in net income for every one dollar in sales

6.8

One of your customers has just made a purchase in the amount of $24,000. You have agreed to payments of $465 per month and will charge a monthly interest rate of 1.29 percent. How many months will it take for the account to be paid off?

85.51 months

Bob has been investing $6,500 in stock at the end of every year for the past 15 years. If the account is currently worth $198,700, what was his annual return on this investment?

9.51%

THE INVENTORY RATIOS FOR PROCTOR AND GAMBLE OVER THE PAST THREE YEARS ARE 5.09, 5.72 AND 5.92 TIMES RESPECTIVELY. EXPLAINING THE UPWARD TREND IN THE INVENTORY TURNOVER RATIO REQURIRES

further investigation

long-term debt on the common-size balance sheet of solid rock construction over the past three years is 30%, 34%, and 40%, respectively. This indicates that the firm has increased its ________

leverage

the accounting equation shows that stockholders' equity equals assets _____ liabilities

minus

One year ago, the Jenkins Family Fun Center deposited $4,400 into an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $6,200 to this account. They plan on making a final deposit of $8,400 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a rate of return of 9 percent?

$26,399.99

To fund your dream around-the-world vacation, you plan to save $1,325 per year for the next 15 years starting one year from now. If you can earn an interest rate of 5.89 percent, how much will you have saved for your vacation?

$30,583.50

Your sister just deposited $8,500 into an investment account. She believes that she will earn an annual return of 9.4 percent for the next 9 years. You believe that you will only be able to earn an annual return of 8.8 percent over the same period. How much more must you deposit today in order to have the same amount as your sister in 9 years?

$431.30

What is the future value of $3,128 invested for 9 years at 6.5 percent compounded annually?

$5,513.32

Beatrice invests $1,370 in an account that pays 5 percent simple interest. How much more could she have earned over a 6-year period if the interest had been compounded annually?

$54.93

Myca Corp. has a project with the following cash flows. What is the value of the cash flows today assuming an annual interest rate of 9.8 percent? YearCash Flow1 1, 1780 2, 2240 3, 2570 4, 2580

$7,195.62

You are set to receive an annual payment of $12,100 per year for the next 17 years. Assume the interest rate is 7 percent. How much more are the payments worth if they are received at the beginning of the year rather than the end of the year?

$8,269.45

Your parents are giving you $205 a month for 4 years while you are in college. At an interest rate of .48 percent per month, what are these payments worth to you when you first start college?

$8,770.00

We Pay Insurance Co. will pay you $1,375 each quarter for 24 years. You want to earn a minimum interest rate of .96 percent per quarter. What is the most you are willing to pay today for these payments?

$85,989.82

what is the present value of an ordinary annuity that pays $100 per year for 20 years if the interest rate is 10% per year

$851.36

Jenny Enterprises has just entered a lease agreement for a new manufacturing facility. Under the terms of the agreement, the company agreed to pay rent of $11,500 per month for the next 8 years with the first payment due today. If the APR is 6.24 percent compounded monthly, what is the value of the payments today?

$871,871.85

You have just started a new job and plan to save $5,400 per year for 32 years until you retire. You will make your first deposit in one year. How much will you have when you retire if you earn an annual interest rate of 9.26 percent?

$933,751.77

The most recent census for a city indicated that there were 898,938 residents. The population of the city is expected to increase at an annual rate of 3.5 percent each year for the next 11 years. What will the population be at that time?

1,312,422

You have just received an offer in the mail from Friendly Loans. The company is offering to loan you $4,750 with low monthly payments of $85 per month. If the interest rate on the loan is an APR of 14.4 percent compounded monthly, how long will it take for you to pay off the loan?

93.09 months

Cal's Market has return on equity (ROE) of 15 percent. What does this mean?

Cal's generated $.15 in profit for every $1 of book of equity

when a customer purchases an item on credit, the purchase amount is recorded by the seller in which one of these accounts

accounts receivable

payday loans allow you to

borrow now and repay later

Rank the ease (from easiest to hardest) of turning the following assets into cash

cash equivalents accounts receivable inventory plant and equipment

non-cash items do not affect _____

cash flow

the original loan amount is called

principal

the interval measure indicates how long a start-up company can operate until it needs more financing

true