Net Present Value

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MGMT 640 Section 9056, Mid-term Exam Fall 2010 This exam consists of 33 multiple-choice questions. Enter your answers on the Answer tab of the Excel spreadsheet that has been provided. (The worksheet tabs are located at the bottom of your worksheet.) Put your calculations on the Calculations tab as evidence of your work. Your calculations will be used as evidence of your independent work only and will not be used for partial credit for incorrect answers. Change the Excel file name to include your name (i.e. “SmithJMidtermExam”) and submit it in the appropriate assignment folder in your WebTycho classroom before the end of the exam period. Submit only your answer sheet. 1.) Which of the following is an appropriate goal for the…show more content…
a. 7.1%; 0.53 b. 7.1%; 1.90 c. 3.7%; 0.53 d. 3.7%; 1.90 12.) Market-value ratio: RTR Corp. has reported a net income of $812,425 for the year. The company’s share price is $13.45, and the company has 490,475 shares outstanding. Compute the firm’s price-earnings ratio. q. 4.87 times r. 8.12 times s. 5.17 times t. None of the above 13.) Which one of the following statements is NOT correct? u. The DuPont system is based on two equations that relate a firm’s ROA and ROE. v. The DuPont system is a set of related ratios that links the balance sheet and the income statement. w. Shareholders cannot use this tool since shareholders outside of management do not have access to the information required to complete a DuPont system analysis. x. All of the above are correct. 14.) For a firm that has no debt in its capital structure, y. ROE > ROA. z. ROE = ROA. {. ROE < ROA. |. None of the above 15.) Present value: John Hsu wants to start a business in 12 years. He hopes to have $130,000 at that time to invest in the business. To reach his goal, he plans to invest a certain amount today in a bank CD that will pay him 7.50 percent annually. How much will he have to invest today to achieve his target? (Round to the nearest dollar.) a.

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