Financial management Solutions

FINANACIAL MANAGEMENT

1. Which of the following is calculated by subtracting the cost of goods sold and administrative expense from net sales?

A. Total liabilities

B. Operating income

C. Inventory cost

D. Accounts receivable

2. At an interest rate of 6.25% percent compounded annually, how many years will it take for an investment of $7,000 to grow to $10,000? (Round to the nearest year.)

A. 8 years

B. 4 years

C. 6 years

D. 10 years

3. What is the present value of an annuity due if you deposit $1,200 per year for the next 5 years into an account that earns an interest rate of 5 percent annually?

A. $5,195

B. $8,288

C. $6,703

D. $5,455

4. A beta coefficient for a risky stock is

A. less than 1.0.

B. negative.

C. equal to 1.0.

D. greater than 1.0.

5. What is the future value of an annuity due if you deposit $1,500 per year for the next 5 years into an account that earns an interest rate of 5 percent annually?

A. $7,500

B. $8,703

C. $11,914

D. $8,288

6. If annual interest rates are 10 percent, which of the following values is the lowest?

A. The present value of an investment that will be worth $100 after 2 years

B. The present value of an annuity that will pay $200 a year, at the end of each of the next 4 years

C. The future value of a $100 investment after 3 years

D. The future value of an investment after 4 years, if $100 is deposited annually

7. Liabilities equal

A. assets.

B. equity.

C. equity minus assets.

D. assets minus equity.

8. What is the required return using the CAPM if the stock's beta is 1.2, and the individual, who expects the market to rise by 13.2%, can earn 6.4% invested in a risk-free Treasury bill?

A. 14.56%

B. 9.46%

C. 24.58%

D. 11.62%

9. If annual interest rates are 10 percent, which of the following values will be the greatest?

A. The future value of a $100 investment after 3 years

B. The present value of an annuity that will pay $200 a year, at the end of each of the next 4 years

C. The future value of an annuity after 4 years, if $100 is deposited annually

D. The present value of an investment that will be worth $100 after 2 years

10. What is the future value of an ordinary annuity if you deposit $500 per year for the next 10 years in an account that earns an interest rate of 4 percent annually?

A. $5,263

B. $6,003

C. $1,700

D. $5,000