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Question 1.
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Question :
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(TCO G) The firm’s asset turnover measures
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Question 2.
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Question :
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(TCO G) The DuPont Identity expresses the
firm’s ROE in terms of
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Question 3.
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Question :
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(TCO B) You plan on retiring in 20 years. You
currently have $275,000 and think you will need $1,000,000 to retire.
Assuming you don’t deposit any additional money into the account, what
annual return will you need to earn to meet this goal?
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Question 4.
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Question :
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(TCO B) You take out a 5 year car loan for $20,000.
The loan has a 5% annual interest rate. The payments are made monthly.
What are the monthly payments? Show your work.
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Question 5.
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Question :
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(TCO B) You currently have $10,000 in your retirement
account. If you deposit $500 per month and the account pays 5% interest,
how much will be in the account in 10 years? Show your work.
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Question 6.
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Question :
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(TCO B) An accident victim has received a
structured settlement. According to the terms of the agreement, the
victim will receive $10,000 per year at the end of each year for the next
10 years. Additionally, the victim will receive $20,000 in 10 years. The
victim believes they could get 7% annually on an investment they could
make if they had all the money now. What would the money be worth to them
if they could get it now? Show your work.
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Question 7.
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Question :
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(TCO F) A project requires an initial cash outlay
of $95,000 and has expected cash inflows of $20,000 annually for 9 years.
The cost of capital is 10%. What is the project’s NPV? Show your work.
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Question 8.
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Question :
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(TCO F) A project requires an initial cash
outlay of $60,000 and has expected cash inflows of $15,000 annually for 8
years. The cost of capital is 10%. What is the project’s payback period?
Show your work.
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Question 9.
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Question :
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(TCO F) A project requires an initial cash outlay
of $60,000 and has expected cash inflows of $15,000 annually for 8 years.
The cost of capital is 10%. What is the project’s IRR? Show your work.
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Question 10.
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Question :
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(TCO F) A project requires an initial cash
outlay of $60,000 and has expected cash inflows of $15,000 annually for 8
years. The cost of capital is 10%. What is the project’s discounted
payback period? Show your work.
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Question 11.
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Question :
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(TCO F) Company A has the opportunity to do
any, none, or all of the projects for which the net cash flows per year
are shown below. Projects A and C can be done together. Projects B and C
can be done together. But Projects A and B are mutually exclusive. The
company has a cost of capital of 18%. Which should the company do and
why? You must use at least two capital budgeting methods. Show your work.
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A
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B
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C
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0
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-500
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-500
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-600
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1
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200
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-200
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100
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2
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200
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600
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100
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3
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200
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400
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100
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4
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200
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200
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100
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5
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200
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-300
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100
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6
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200
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100
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7
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-300
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100
