Determine the present value of inheritance

Assignment Help Finance Basics
Reference no: EM1364650

10. You will receive a $100,000 inheritance in 20 years. You can invest that money today at 6% compounded annually. What is the present value of your inheritance?

a. $27,491.25
b. $29,767.15
c. $31,180.47
d. $35,492.34
e. $100,000

11. Your grandfather place $2,000 in a trust fund for you. In 10 years the fund will be worth $5,000. What is the rate of return on the trust fund?

a. 5.98%
b. 8.76%
c. 9.60%
d. 9.98%
e. 10.14%

12. Your parents agree to pay half of the purchase price of a new car when you graduate from college. You will graduate and buy the car two years from now. You have $6,000 to invest today and can earn 10% on invested funds. If your parents match the amount you have in two years, what is the maximum you can spend on the new car?

a. $7,260
b. $11,948
c. $12,000
d. $13,250
e. $14,520

14. You need to borrow $18,000 to buy a truck. The current loan rate is 9.9% compounded monthly and you wan to pay the loan off in equal monthly payments over 5 years. What is the size of your monthly payment?

a. $363.39
b. $374.04
c. $381.56
d. $394.69
e. $455.66

18. What is the market value of a bond that will pay a total of forty semiannual coupons of $50 each over the remainder of its life? Assume the bond has a $1,000 face value and an 8% YTM.

a. $634.86
b. $642.26
c. $1,135.90
d. $1,197.93
e. $1,215.62

24. Calculate the NPV of the following project using a discount rate of 12%: Yr 0 = -$500; Yr 1 = -$50; Yr 2 = $50; Yr 3 = $200; Yr 4 = $400; Yr 5 = $400.

a. $0.00
b. $61.22
c. $118.75
d. $208.04
e. $269.21

27. You purchase a machine for $12,000, depreciated straight-line to a salvage value of $2,000 over its four-year life. If the machine is sold at the end of the third year for $6,000, what the after-tax proceeds from the sale, assuming your tax rate is 34%?

a. $1,010
b. $3,510
c. $5,010
d. $5,490
e. $6,990

32. What is the expected market return if the expected return on asset A is 16% and the risk-free rate is 7%? Asset A has a beta of 1.2.

a. 9.5%
b. 14.5%
c. 16.5%
d. 17.5%
e. 20.5%

35. Given the following: the risk-free rate is 8% and the market risk premium is 8.5%. Which projects should be accepted if the firm's beta is 1.27.

Project I --- Beta .65 - Expected Return 12%
Project II -- Beta .90 - Expected Return 17%
Project III - Beta 1.40 - Expected Return 19%

a. I only
b. II only
c. III only
d. I and II only
e. None of the projects are acceptable

40. Your firm decides to increase the time allowed customers to pay their bills from 30 to 40 days. All else the same, this action will _______ and _______.

a. increase the firm's operating cycle; increase the firms cash cycle
b. increase the firm's cash cycle; increase the firm's inventory cycle
c. increase the firm's accounts payable period; increase the firm's operating cycle
d. increase the firm's inventory cycle; increase the firm's operating cycle
e. increase the firm's accounts receivable period, increase the firm's inventory cycle

Use the following financial statement information to answer questions #41.

Item Beginning Ending
Inventory $800 $950
Accounts receivable $1,100 $1,200
Accounts payable $750 $650
Credit sales $8,420
Cost of goods sold $6,250

41. What is the inventory turnover?

a. 6.6 times
b. 7.1 times
c. 7.8 times
d. 8.9 times
e. 10.5 times

 

Reference no: EM1364650

Questions Cloud

Describe the relationship between organizational functions : Describe the relationship between organizational functions and organizational structures
Information about partnership : Net Income for Levin-Tom partnership for 2012 was 125000. Levin and Tom have agreed to distribute partership net income according to the following plan.
Integrity and excellence : Business combinations have become an important strategic move by corporations for various reasons. Discuss the various types of business combinations. Why may companies seek to engage in business combinations?
Corporate agency policy on employee use of instant messaging : What specific questions should a corporate or government agency policy on "Employee use of Instant Messaging (IM) using corporate computers" address?
Determine the present value of inheritance : Suppose you receive a $100,000 inheritance in 20 years. You can invest that money today at 6 percent compounded annually. Determine the present value of your inheritance?
Functional coordination and integration : Show the importance and methods of coordination and integration needed among the product, people and support process functional strategies to better ensure overall functional strategy success.
Net cash from operating activities : Why may net cash flow from operating activities on the cash flow statement be different from the amount of net income reported on the income statement?
Personal - financial management : Process of controlling your income and your expenses - financial management has affected (good and/or bad) your work performance?
How much laser be tipped before light no longer continues : If a laser is to be pointed into the end of the fibre, but is "tipped" to one side by θ degrees, how much can the laser be "tipped" before the light no longer continues down the fibre?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd