November 7, 2019
###### option and a European
November 7, 2019

Question 1
1. Suppose you take a mortgage for \$72,764 for 16 years with annual payments. If the annual interest rate is 3.4%, calculate the total interest amount paid over the life of the loan. That is, calculate the total interest paid in 16 years.
Hint: Use the amortization table.
Enter your answer rounded off to two decimal points. Do not enter \$ in the answer box.

1 points
Question 2
1. ABC Company earned \$805,544 in taxable income for the year. How much tax does the company owe on this income?
Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.

1 points
Question 3
1. ABC is reviewing a project that will cost \$1,802.The project will produce cash flows \$683 at the end of each year for the first two years and \$777 at the end of each year for the next three years. What is the profitability index? Assume interest rate is 13%.

1 points
Question 4
1. If you receive \$1,939 at the end of each year for the first three years and \$2,224 at the end of each year for the next two years. What is the future value of this cash flow stream? Assume interest rate is 4%.
Note: Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answer box. For example, if your answer is \$12.345 then enter as 12.35 in the answer box.

1 points
Question 5
1. ABC Company has \$621,809 of operating income after all costs but before \$26,740 of interest income, \$30,015 of dividend income, and taxes. What is the tax expense?
Enter your answer rounded off to two decimal points. Do not enter \$ in the answer box.

1 points
Question 6
1. ABC Company had beginning retained earnings of \$848. During the year, the company reported sales of \$18,389, costs of \$6,672, depreciation of \$1,656, dividends of \$1,262, and interest paid of \$1,955. The tax rate is 16 percent. What is the retained earnings balance at the end of the year?
Enter your answer rounded off to two decimal points. Do not enter \$ in the answer box.

1 points
Question 7
1. ABC Company has total assets of \$872,969. There are 42,317 shares outstanding with a market value of \$36 per share. If the net profit margin is 8.8% and the total asset turnover is 1.3, what is the price/earnings (P/E) ratio?

1 points
Question 8
1. ABC Company has net working capital of \$2,612, current assets of \$9,741, long-term debt of \$2,652, and equity of \$3,926. What is the amount of net fixed assets?
Enter your answer rounded off to two decimal points. Do not enter \$ in the answer box

1 points
Question 9
1. Debbie wants to have \$38,855 in her bank account 5 years from now. The account will pay 0.7% interest per month. How much money does she need to put in her bank account at the end of each month to achieve this goal?
Enter your answer rounded off to two decimal points. Do not enter % or \$ in the answer box.

1 points
Question 10
1. How many years will it take to triple your money at 6% compounded monthly?
Enter your answer rounded off to TWO decimal points. Do not enter “years” in the answer box.

1 points
Question 11
1. You are given the following data for ABC Inc.:
Net income = \$600
Net operating profit after taxes (NOPAT) = \$1,392
Total assets = \$2,500
Stockholders’ equity = \$1,800
Total debt = \$700
Total operating capital = \$6,907
Barnes’ weighted average cost of capital is 11%.
What is the economic value added (EVA)?
Enter your answer rounded off to two decimal points. Do not enter \$ in the answer box.

1 points
Question 12
1. What is the net present value of the following cash flows? Assume an interest rate of 13%
Year CF
0 -\$11,804
1 \$6,951
2 \$5,235
3 \$9,416
2. Enter your answer rounded off to two decimal points. Do not enter \$ or comma in the answers box.
3.
1 points
Question 13
1. You are given the following information about ABC Company:
Interest expenses = \$10,452
Times Interest Earned Ratio = 3.5 times
Tax Rate = 32%
What is the net income?

1 points
Question 14
1. Which one of the following capital budgeting technique ignores time value of money?

Profitability Index

Internal Rate of Return (IRR)

Payback

Net Present Value (NPV)

Modified Internal Rate of Return (MIRR)
1 points
Question 15
1. Consider a taxable bond with a yield of 12.9% and a tax-exempt municipal bond with a yield of 5.5%. At what tax rate would you be indifferent between the two bonds?
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points
Question 16
1. ABC, Inc. has a total asset turnover of 1.4 and a net profit margin of 12.6%. The firm has a return on equity of 29.7%. Calculate Marshall’s debt ratio.
Enter your answer as a percentage rounded off to two decimal points. Do not enter % in the answer box. For example, if you get 0.1234567, then enter as 12.35 in the answer box.

1 points
Question 17
1. ABC’s current assets comprise of cash, accounts receivables, and inventory. ABC has \$14,431 in cash, \$9,948 in accounts receivables, and \$8,062 in inventory. If the current ratio is 2.2 times, compute the quick ratio.

1 points
Question 18
1. ABC Company lists total assets of \$2,901, current liabilities of \$323 , long-term debt of \$712 , and 395 shares of common stock. If the market price per share is \$55, what is the market-to-book ratio?

1 points
Question 19
1. Suppose you invest \$23,760. If the interest rate is 9% compounded quarterly for the first 10 years and 10% compounded monthly for the next 5 years, what is the future value after 15 years?
Enter your answer rounded off to two decimal points. Do not enter \$ in the answer box.

1 points
Question 20
1. What is the future value of \$21,662 invested for 10 years at 11% compounded semi-annually?
Enter your answer rounded off to two decimal points. Do not enter \$ in the answer box.

1 points
Question 21
1. ABC, Inc. has total assets of \$131,696, current assets of \$27,316, current ratio of 2.9, and equity multiplier of 6.1. Compute long term debt.
Enter your answer rounded off to two decimal points. Do not enter \$ in the answer box.

1 points
Question 22
1. ABC Company has a debt ratio of 0.46. What is the debt-equity (D/E) ratio?

1 points
Question 23
1. What is the effective rate of 31.69% compounded quarterly?
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points
Question 24
1. A project has the following cash flows. What is the internal rate of return?
Year 0 1 2 3
Cash flow -\$121,000 68,150 \$42,200 \$39,100

14.39%

14.82%

12.71%

13.47%

13.85%
1 points
Question 25
1. ABC Company offers a perpetuity which pays annual payments of \$8,150. This contract sells for \$308,671 today. What is the interest rate?
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points
Question 26
1. The present value of a 15-year annuity is \$124,850. If the interest rate is 18% and payments are made at the end of each period, what is the amount of each payment?
Enter your answer rounded off to two decimal points. Do not enter \$ in the answer box.

1 points
Question 27
1. If you receive \$877 at the end of each year for the first two years and \$392 at the end of each year for the next two years.
Assume interest rate is 9%. What is the value at the end of the 4th year? That is. solve for FV at the end of the 4th year. 