FINC 5310 Exam 1
QUESTION 1
A 3-year project is expected to produce a cash flow of $82,400 in the first year and $148,600 in
the second year. The project has a present value of $303,764.34 at a discount rate of 12.75
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FINC 5310 Exam 1
QUESTION 1
A 3-year project is expected to produce a cash flow of $82,400 in the first year and $148,600 in
the second year. The project has a present value of $303,764.34 at a discount rate of 12.75
percent. What is the expected cash flow in the third year of the project?
A. $164,400
B. $163,800
C. $163,700
D. $163,100
E. $164,900 - ✔✔D
QUESTION 2
A credit card compounds interest monthly and has an effective annual rate of 12.67 percent.
What is the annual percentage rate?
A. 11.93%
B. 11.99%
C. 12.00%
D. 11.87%
E. 12.35% - ✔✔B
QUESTION 3
A small craft store located in a kiosk expects to generate annual cash flows of $6,800 for the next
three years. At the end of the three years, the business is expected to be sold for $15,000. What is
the value of this business at a discount rate of 15 percent?
A. $25,388.67
B. $30,100.07
C. $17,409.09
D. $19,477.67
E. $29,408.27 - ✔✔A
QUESTION 4
An annuity stream of cash flow payments is a set of:
A. arbitrary cash flows occurring each time period for no more than 10 years.
B. increasing cash flows occurring at set intervals of time that go on forever.
C. either equal or varying cash flows occurring at set intervals of time for a fixed period.
D. equal cash flows occurring each time period over a fixed length of time.
E. equal cash flows occurring each time period forever. - ✔✔D
QUESTION 5
Browning's has a debt-equity ratio of .47. What is the equity multiplier?
A. 1.47
B. 1.53
C. 2.13
D. 1.13
E. .53 - ✔✔A
QUESTION 6
Browning's has a debt-equity ratio of .47. What is the equity multiplier?
A. .53
B. 1.13
C. 1.47
D. 1.53
E. 2.13 - ✔✔C
QUESTION 7
Total Common Equity = $444,400
Common Stock = $220,000
Retained Earnings = $224,400
Deep Falls Timber stock sold for $6.50 a share as of 2015. What was the market-to-book ratio at
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