finalterm review公司理财复习题

一、Multiple choices

1.Your grandfather placed $5,000 in a trust fund for you. In 12 years the fund

will be worth $10,000. What is the rate of return on the trust fund?

A) 3.70% B) 4.16% C) 5.95% D) 6.90% E) 8.42%

2.You are supposed to receive $3,000 four years from now. At an interest rate

of 8%, what is that $3,000 worth today?

A) $1,591.97 B) $1,892.43 C) $2,205.09 D) $2,497.91 E)

$2,699.01

3.The company you work for will deposit $150 at the end of each month into

your retirement fund. Interest is compounded monthly. You plan to retire 25 years from now and estimate that you will need $2,000 per month out of the account for the ensuing 20 years. If the account pays 10% compounded monthly, how much do you need to put into the account each month, in addition to your company's deposit, in order to meet your objective?

A) $ 0.00; the company's deposit fully funds your retirements objective

B) $105.42 C) $ 6.20 D) $21.96 E) $34.33

4.Given the following information, what is the firm's weighted average cost of

capital? Market value of equity = $30 million; market value of debt = $20 million; cost of equity = 15%; cost of debt = 9%; equity beta = 1.4; tax rate = 35%.

A) 11.34% B) 12.60% C) 12.97% D) 13.32% E) 14.08%

5.What is the future value in 12 years of $800 payments received at the

beginning of each year for the next 12 years? Assume an interest rate of

8.25%.

A) $14,259.63 B) $15,408.65 C) $16,679.86 D) $18,495.48 E)

$20,782.15

6.At the end of each year for the next 8 years you will receive cash flows of

$500. If the appropriate discount rate is 7.5%, how much would you pay for this annuity?

A) $4,000.00 B) $5,841.22 C) $1,259.47 D) $2,928.65 E)

$3,148.30

7.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 $9,000 to invest today and can earn 12% on invested funds.

If your parents match the amount of money you have in two years, what is the maximum you can spend on the new car?

A) $ 7,260 B) $11,290 C) $15,000 D) $19,250 E) $22,579

8.You need $3,000 to buy a new stereo for your car. If you have $1,200 to

invest at 6% compounded annually, how long will you have to wait to buy the stereo?

A) 6.58 years B) 8.42 years C) 11.60 years D) 14.58 years E)

15.73 years

9.Cornerstone Industries has a bond outstanding with an 8% coupon rate and

a market price of $874.68. If the bond matures in 6 years and interest is