BFIN Finals- Questions with Correct Verified
Answers
Net Corp. has an ROE of 20% and would like to see earnings grow at a 13.60% annual
rate. What percentage of earnings can it afford to payout as dividends?
a. 68%
b. 32%
c. 5.33%
d. 17%
b. 32%
(growth in earning [.1360 = plowback(b) x ROE (.20)]
What is the FV of $27,000 on deposit for six years at 6% simple interest?
a. $36,720
b. $38,300.02
c. $19,033.93
d. $28,580.02
a. $36,720
How much must be deposited today in an account earning 4% annually to accumulate a
15% down payment to use in purchasing a car one year from now, assuming that the car's
current price is $30,000, and inflation will be 2%?
,a $4,327
b. $4,351
c. $4,413
d. $4,545
c. $4,413
FV = 30,000 x 1.02 = $30,600
Down Pmt = $30,600 x .15 = $4,590
PV = $4,590/(1.04) = $4,413
What is the PV of the following payment stream, discounted at 9% annually: $2,800 at the
end of year 1, $3,800 at the end of year 2, and $4,800 at the end of year 3?
a. $9,473.67
b. $9,694.67
c. $9,764.17
d. 9,688.42
a. $9,473.67
PV = 0 + 2800/1.09 + 3,800/1.09^2 + 4800/1.09^3 = 9,473.67
A perpetuity of $4,500 per year beginning today is said to offer a 13% interest rate. What is
its present value?
, a. $51,769.91
b. $38,597.69
c. $34,615.38
d. $39,115.38
d. $39,115.38
PV = 4500 + 4500/0.13 = $39,115.38
$65,000 is borrowed, to be repaid in 3 equal payments with 13% interest. Approximately
how much principal is amortized witht he first payment? (to be excluded)
a. $3,578.76
b. $27,528.93
c. $8,450.00
d. $19,078.93
d. $19,078.93
N=3; I/Y=13; PV=65000; FV=0; CPT PMT=?
PMT=27,528.93
1st year interest = 65000 x .13 = 8,450
27528.93 - 8450 = 19,078.93
Answers
Net Corp. has an ROE of 20% and would like to see earnings grow at a 13.60% annual
rate. What percentage of earnings can it afford to payout as dividends?
a. 68%
b. 32%
c. 5.33%
d. 17%
b. 32%
(growth in earning [.1360 = plowback(b) x ROE (.20)]
What is the FV of $27,000 on deposit for six years at 6% simple interest?
a. $36,720
b. $38,300.02
c. $19,033.93
d. $28,580.02
a. $36,720
How much must be deposited today in an account earning 4% annually to accumulate a
15% down payment to use in purchasing a car one year from now, assuming that the car's
current price is $30,000, and inflation will be 2%?
,a $4,327
b. $4,351
c. $4,413
d. $4,545
c. $4,413
FV = 30,000 x 1.02 = $30,600
Down Pmt = $30,600 x .15 = $4,590
PV = $4,590/(1.04) = $4,413
What is the PV of the following payment stream, discounted at 9% annually: $2,800 at the
end of year 1, $3,800 at the end of year 2, and $4,800 at the end of year 3?
a. $9,473.67
b. $9,694.67
c. $9,764.17
d. 9,688.42
a. $9,473.67
PV = 0 + 2800/1.09 + 3,800/1.09^2 + 4800/1.09^3 = 9,473.67
A perpetuity of $4,500 per year beginning today is said to offer a 13% interest rate. What is
its present value?
, a. $51,769.91
b. $38,597.69
c. $34,615.38
d. $39,115.38
d. $39,115.38
PV = 4500 + 4500/0.13 = $39,115.38
$65,000 is borrowed, to be repaid in 3 equal payments with 13% interest. Approximately
how much principal is amortized witht he first payment? (to be excluded)
a. $3,578.76
b. $27,528.93
c. $8,450.00
d. $19,078.93
d. $19,078.93
N=3; I/Y=13; PV=65000; FV=0; CPT PMT=?
PMT=27,528.93
1st year interest = 65000 x .13 = 8,450
27528.93 - 8450 = 19,078.93
