Q13 Bob has $2,500 invested in a bank that pays 4% annually. How long will it ta
ID: 2648650 • Letter: Q
Question
Q13
Bob has $2,500 invested in a bank that pays 4% annually. How long will it take for his funds to double?
16.79
17.67
15.95
15.15
14.39
Question 14
Money markets are markets for
Long-term bonds.
Common stocks.
Consumer automobile loans.
Foreign currencies.
Short-term debt securities such as Treasury bills and commercial paper.
Question 15
Last year Rocco Corporation's sales were $225 million. If sales grow at 6% per year, how large (in millions) will they be 5 years later?
$301.10
$286.05
$271.74
$331.96
$316.16
Question 16
Brown Fashions Inc.'s December 31, 2013, balance sheet showed total common equity of $4,050,000 and 200,000 shares of stock outstanding. During 2013, the firm had $450,000 of net income, and it paid out $100,000 as dividends. What was the book value per share at 12/31/13, assuming no common stock was either issued or retired during 2013?
$24.26
$23.10
$22.00
$20.90
$25.47
Question 17
The annual rate of return on any given stock can be found as the stock's dividend for the year plus the change in the stock's price during the year, divided by its beginning-of-year price.
True
False
Question 18
A U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiannual compounding. Which of the following statements is CORRECT?
The present value would be greater if the lump sum were discounted back for more periods.
The periodic interest rate is greater than 3%.
The PV of the $1,000 lump sum has a higher present value than the PV of a 3-year, $333.33 ordinary annuity.
The periodic rate is less than 3%.
The present value of the $1,000 would be smaller if interest were compounded monthly rather than semiannually.
Question 19
Ajax Corp's sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times-interest-earned (TIE) ratio?
5.80
4.72
5.23
5.51
4.97
Question 20
A loss incurred by a corporation
Can be carried back 3 years or forward 10 years, whichever is more advantageous to the firm.
Must be carried forward unless the company has had 2 loss years in a row.
Can be carried back 2 years, then carried forward up to 20 years following the loss.
Can be carried back 5 years and forward 3 years.
Cannot be used to reduce taxes in other years except with special permission from the IRS.
a.16.79
b.17.67
c.15.95
d.15.15
e.14.39
Explanation / Answer
13) Future value = Present value ( 1+R)^n
5000 = 2500( 1+0.04)^n
5000 = 2500(1.04)^n
Solving above we get n =17.67 years
14) Short term debt securities such as treasury bills and commercial paper
15) Sales today = 225
Every year increment = 6%
Sales after 5 years will be = 225*106%*106%*106%*106%*106%
= 301.10
16) Book value per share = Total Value of equity/ Total number of shares outstanding
= ((4050000+(450000-100000)/200000
= 22
17) True
18) The present value of 1000 is higher then annuity
19) Times interest earned ratio = EBIT / Total interest payable
=(435000-362500) / 12500
= 5.80 times
20) Can be carried back 5 years and and forwrd 3 years
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