1546 WordsMar 18, 20127 Pages

TEST BANK:
TIME VALUE OF MONEY
(Difficulty: E = Easy, M = Medium, and T = Tough)
Multiple Choice: Problems
Easy:
FV of a single payment Answer: d Diff: E . You deposit $2,000 in a savings account that pays 10 percent interest, compounded annually. How much will your account be worth in 15 years?
a. $2,030.21
b. $5,000.00
c. $8,091.12
d. $8,354.50
e. $9,020.10
FV of a single payment Answer: c Diff: E . You deposit $1,000 in a savings account that pays 9 percent interest, compounded annually. How much will your account be worth in 6 years?
a. $1,054.00
b. $1,199.00
c. $1,677.10
d. $1,689.48
e. $7,523.33
PV of a single payment Answer: b Diff: E . You can earn 8 percent interest, compounded*…show more content…*

$117.48
Effective annual rate Answer: c Diff: E . Gomez Electronics needs to arrange financing for its expansion program. Bank A offers to lend Gomez the required funds on a loan where interest must be paid monthly, and the quoted rate is 8 percent. Bank B will charge 9 percent, with interest due at the end of the year. What is the difference in the effective annual rates charged by the two banks?
a. 0.25%
b. 0.50%
c. 0.70%
d. 1.00%
e. 1.25%
Effective annual rate Answer: b Diff: E . You recently received a letter from Cut-to-the-Chase National Bank that offers you a new credit card that has no annual fee. It states that the annual percentage rate (APR) is 18 percent on outstanding balances. What is the effective annual interest rate? (Hint: Remember these companies bill you monthly.)
a. 18.81%
b. 19.56%
c. 19.25%
d. 20.00%
e. 18.00%
Effective annual return Answer: b Diff: E . Which of the following investments has the highest effective return (EAR)? (Assume that all CDs are of equal risk.)
a. A bank CD which pays 10 percent interest quarterly.
b. A bank CD which pays 10 percent monthly.
c. A bank CD which pays 10.2 percent annually.
d. A bank CD which pays 10 percent semiannually.
e. A bank CD which pays 9.6 percent daily (on a 365-day basis).
Effective annual return Answer: a Diff: E
. Which one of the following investments provides the highest effective return?
a. An investment which has a 9.9 percent nominal

Related

## Principles of Managerial Finance 10th Answers

22578 Words | 91 PagesPART 1 Introduction to Managerial Finance CHAPTERS IN THIS PART 1 2 3 The Role and Environment of Managerial Finance Financial Statements and Analysis Cash Flow and Financial Planning INTEGRATIVE CASE 1: TRACK SOFTWARE, INC. CHAPTER 1 The Role and Environment of Managerial Finance INSTRUCTOR’S RESOURCES Overview This chapter introduces the student to the field of finance and explores career opportunities in both financial services and managerial finance. The three basic legal forms of business

## FIN 515 Managerial Finance Week 3 First Course Project Answer

1050 Words | 5 Pagesratio is calculated as: Asset Turnover = Revenue / Assets The equity multiplier is calculated as follows: Equity Multiplier = Assets / Shareholder’s Equity. A higher ratio indicates that the company is relying for a large part on borrowing money to finance the purchase of assets. DuPont Analysis breaks the Return on Equity into several different components in order to analyze where the returns are coming from. Return on Equity (ROE) is one of the most important pieces of data that investors and creditors

## Chirality in Chemical Reactions Essay

1169 Words | 5 PagesFinance – 419 Scrap #29 Principles of Managerial Finance, by Lawrence J. Gitman. Published by Addison Wesley. Copyright © 2006 by Pearson Education, Inc. Individual Assignment 1: Assignments from the Readings • Resource: Principles of Managerial Finance • Prepare responses to the following problems from the text: o Problems P5-3, P5-4, and P5-13 (Ch. 5) o Problem P10-4

## Principles Of Managerial Finance Gitman 14th

13829 Words | 56 PagesPrinciples of Managerial Finance Gitman 14th Edition Test Bank Click here to download the test bank INSTANTLY!!! http://www.solutionsmanualtestbank.com/products/2014/9/15/pr inciples-of-managerial-finance-gitman-14th-edition-test-bank Principles of Managerial Finance Gitman 14th Edition Test Bank Principles of Managerial Finance Gitman Zutter 14th Edition Test Bank ***THIS IS NOT THE ACTUAL TEXTBOOK. YOU ARE PURCHASING the Test Bank in e-version of the following textbook*** Name: Principles of Managerial

## Walmart Stores, Incorporated

610 Words | 3 PagesManagement of Working Capital Case Study: “George’s Trains” This assignment consists of a profitable business ran by a man name “George.” George is aware that we are in a MBA Managerial Finance class and he needs advice on his working capital practices. George would like the answers to the following: • Describe his working capital practices, including his methods of capital budgeting analysis techniques. • Analyze the potential pitfalls in his capital budgeting practices that George should

## Assingment 2.1

816 Words | 4 Pagesthis account is currently paying 0.7% (yes, that’s right, less than 1%!), what will the account balance be after 1 year? The answer is $2,517.5 E5-2 If Bob and Judy combine their savings of $1,260 and $975, respectively, and deposit this amount into an account that pays 2% annual interest, compounded monthly, what will the account balance be after 4 years? The answer is $2,419.2358 E5-3 Gabrielle just won $2.5 million in the state lottery. She is giving the option of receiving a total of

## Business Policy Developments And Implementation

918 Words | 4 Pageseither visionary leadership or strategic leadership, as presented by Rowe? Answer: Yes, the strategic leadership is exhibited by the Sir Richard Branson, one of the greatest business tycoon of United Kingdom and one of the most revered entrepreneurs of modern times. As Rowe mentioned in his article, ‘Creating wealth in Organizations’ that the premise of Strategic leadership is based on the pre-assumption that both managerial and visionary leadership coexist. At the same time, the strategic leadership

## Mba 640 Managerial Economics

1427 Words | 6 PagesMBA 640 (Summer IS 2010) MANAGERIAL ECONOMICS EXAM #1 STUDENT NAME: Exam is open book and open material. 1. Explain the interaction of Managerial Economics with other business disciplines, giving specific examples. Managerial economics has been defined by conventional theorists as a science that "is all about how people make choices" After you’ve defined managerial economics and it’s relationship to its economic theory. Managerial economics will interact with each of these business’s

## Southwest Still Flies High

1483 Words | 6 Pageseffectively. In what ways do efficiency and effectiveness support each other at Southwest? In what ways do they contradict each other? Answer: Efficiency at Southwest Airlines: Efficiency or being efficient in business terms means using an organization’s resources (Human, Finance, Physical and Informational) wisely and in a cost effective way. Efficiency is using managerial skills to minimize losses and reduce expenditure while maximizing the organization’s profits. From this perspective Southwest Airlines

## Accounting Homework 2

1133 Words | 5 PagesAccounting 202 Homework Chapter 1-Managerial Accounting , the Business Organization, and Professional Ethics 1-40 Use of Accounting Information in Hospitals Most U.S. hospitals do not derive their revenue directly from patients. Instead, revenues come through third parties, such as insurance companies and government agencies. Until the 1980s, these payments generally reimbursed the hospital’s costs of serving patients. Such payments , however , are now generally flat fees for specified services

### Principles of Managerial Finance 10th Answers

22578 Words | 91 Pages### FIN 515 Managerial Finance Week 3 First Course Project Answer

1050 Words | 5 Pages### Chirality in Chemical Reactions Essay

1169 Words | 5 Pages### Principles Of Managerial Finance Gitman 14th

13829 Words | 56 Pages### Walmart Stores, Incorporated

610 Words | 3 Pages### Assingment 2.1

816 Words | 4 Pages### Business Policy Developments And Implementation

918 Words | 4 Pages### Mba 640 Managerial Economics

1427 Words | 6 Pages### Southwest Still Flies High

1483 Words | 6 Pages### Accounting Homework 2

1133 Words | 5 Pages