21) If a 16-year-old high school student put $2,000 at the end of each year for 4 years into an IRA that earned a rate of 9%, how much would she have accumulated by age 65? Assume funds are left to accumulate for 45 years (age 20-65) at 9%. a.$386,616 b.$9,146 c.$1,767,995 d.$442,014 .
MCQ'S:
21) If a 16-year-old high school student put $2,000 at the end of each year for 4 years into an IRA that earned a rate of 9%, how much would she have accumulated by age 65? Assume funds are left to accumulate for 45 years (age 20-65) at 9%.
a.$386,616
b.$9,146
c.$1,767,995
d.$442,014 .
22) Clinch River Power is considering refunding a $150 million 12% coupon bond with a 10% coupon bond, 20-year bond. The current bond also matures in 20 years and is now callable at 110% of par. The unamortized flotation cost on the old issue is $540,000, and the flotation cost of the new issue is 0.925%. Clinch River estimates that there would be a 4-week period where both bonds would be outstanding. The company has a weighted cost of capital of 11% and a 40% marginal tax rate. Clinch River has decided to sell the refunding issue. What is their reasoning?
a.NPV is approximately $10.808 million
b.NPV is approximately $9.930 million
c.NPV is approximately $9.838 million .
d.NPV is approximately $9.655 million
23) If you invest $10,000 in a 4-year certificate of deposit (CD) paying 10 percent interest compounded annually, determine how much the CD will be worth at the end of 4 years.
a.$13,600
b.$15,958
c.$45,730
d.$14,640 .
24) Airstat is replacing an old stamping line that cost $80,000 five years ago, with a new, more efficient machine that will cost $225,000. Shipping and installation will cost an additional $20,000. The old machine has a book value of $15,000 but will be sold as scrap for $5,000. The new machine will be
a.$242,000 .
b.$274,000
c.$260,000
d.$274,000
25) Excelsior Company's capital structure is as follows:
Common stock ($2 par value, 2,000,000 shares)
$ 4,000,000
Contributed capital in excess of par
16,000,000
23,000,000
Total common
$43,000,000
The current market price of the firm's common stock is $30. Assuming the firm declares a 10% stock dividend, determine the balance in the contributed capital in excess of par and retained earnings accounts.
a.$22,000,000; $17,000,000
b.$21,600,000; $23,000,000 .
c.$17,000,000; $21,600,000
d.$21,600,000; $17,000,000
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