FINA 365 Exam 2 WITH CORRECT |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
ANSWERS
Which one of these is a requirement if the sustainable growth rate is to exceed the internal
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growth rate? - correct answer✔✔Total debt > $0 |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
You are going to deposit $4400 in an account that pays 0.70 percent interest compounded
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
quarterly. How much will you have in 7 years? - correct answer✔✔FV = $4400 × 1.007^28 =|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
$5349.06
Jenny Enterprises has just entered a lease agreement for a new manufacturing facility. Under
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the terms of the agreement, the company agreed to pay rent of $19,000 per month for the
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
next 5 years with the first payment due today. If the APR is 8.04 percent compounded monthly,
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
what is the value of the payments today? - correct answer✔✔PV = $19,000(1.0067)[(1-
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
1/1.0067^60) / 0.0067] = $942,438.44 |||\\\ |||\\\ |||\\\ |||\\\
Ten years ago, Jackson Supply set aside $125,000 in case of a financial emergency. Today, that
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
account has increased in value to $278,592. What rate of interest is the firm earning on this
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
money? - correct answer✔✔$278,592 = $125,000[(1 + r)10] r = .0834, or 8.34%
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Your sister just deposited $14,000 into an investment account. She believes that she will earn
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
an annual return of 10.5 percent for the next 9 years. You believe that you will only be able to
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
earn an annual return of 9.8 percent over the same period. How much more must you deposit
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today in order to have the same amount as your sister in 9 years? - correct answer✔✔FV =
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
$14,000 × 879.019 = $34,386.54 |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
PV = $34,386.54/1.0989 = $14,824.07
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Difference = $14,824.07í 14,000 = $824.07 |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
ANSWERS
Which one of these is a requirement if the sustainable growth rate is to exceed the internal
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
growth rate? - correct answer✔✔Total debt > $0 |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
You are going to deposit $4400 in an account that pays 0.70 percent interest compounded
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
quarterly. How much will you have in 7 years? - correct answer✔✔FV = $4400 × 1.007^28 =|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
$5349.06
Jenny Enterprises has just entered a lease agreement for a new manufacturing facility. Under
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
the terms of the agreement, the company agreed to pay rent of $19,000 per month for the
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
next 5 years with the first payment due today. If the APR is 8.04 percent compounded monthly,
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
what is the value of the payments today? - correct answer✔✔PV = $19,000(1.0067)[(1-
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
1/1.0067^60) / 0.0067] = $942,438.44 |||\\\ |||\\\ |||\\\ |||\\\
Ten years ago, Jackson Supply set aside $125,000 in case of a financial emergency. Today, that
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
account has increased in value to $278,592. What rate of interest is the firm earning on this
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
money? - correct answer✔✔$278,592 = $125,000[(1 + r)10] r = .0834, or 8.34%
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
Your sister just deposited $14,000 into an investment account. She believes that she will earn
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
an annual return of 10.5 percent for the next 9 years. You believe that you will only be able to
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
earn an annual return of 9.8 percent over the same period. How much more must you deposit
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
today in order to have the same amount as your sister in 9 years? - correct answer✔✔FV =
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
$14,000 × 879.019 = $34,386.54 |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
PV = $34,386.54/1.0989 = $14,824.07
|||\\\ |||\\\ |||\\\ |||\\\ |||\\\
Difference = $14,824.07í 14,000 = $824.07 |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
