WGU C214 Financial Management – Objective
Assessment (OA) Practice Exam 2025/2026
163 Realistic Questions with Verified Answers &
Detailed Rationales
Comprehensive Study Guide for Time Value of Money, Capital Budgeting, Risk & Return,
Cost of Capital, Financial Ratios, Dividend Policy, and Valuation
Q1. You invest $8,000 at 5% annual interest for 3 years. What is the future value?
A) $9,260
B) $9,410
C) $9,520
D) $9,600
Answer: C) $9,520
Rationale:
FV=PV(1+r)n=8000(1.05)3=9520FV = PV(1 + r)^n = 8000(1.05)^3 =
9520FV=PV(1+r)n=8000(1.05)3=9520
Q2. What is the present value of $15,000 received in 5 years at 6% discount rate?
A) $11,203
B) $11,185
C) $11,220
D) $11,150
Answer: A) $11,203
Rationale:
PV=FV(1+r)n=150001.065≈11,203PV = \frac{FV}{(1 + r)^n} =
\frac{15000}{1.06^5} \approx 11,203PV=(1+r)nFV=1.06515000≈11,203
,Q3. A company invests $12,000 at 8% compounded quarterly for 2 years. FV = ?
A) $14,947
B) $14,900
C) $14,950
D) $14,960
Answer: A) $14,947
Rationale:
FV=12,000(1+0.08/4)4⋅2=12,000(1.02)8≈14,947FV = 12,000(1 + 0.08/4)^{4 \cdot
2} = 12,000(1.02)^8 \approx
14,947FV=12,000(1+0.08/4)4⋅2=12,000(1.02)8≈14,947
Q4. You need $50,000 in 10 years. How much to invest today at 7% annually?
A) $25,650
B) $25,840
C) $25,700
D) $25,900
Answer: B) $25,840
Rationale:
PV=FV(1+r)n=50,0001.0710≈25,840PV = \frac{FV}{(1 + r)^n} =
\frac{50,000}{1.07^{10}} \approx 25,840PV=(1+r)nFV=1.071050,000≈25,840
Q5. A perpetuity pays $1,500 annually. Discount rate = 6%. PV = ?
A) $25,000
B) $24,500
C) $25,500
D) $26,000
Answer: A) $25,000
Rationale:
PV=CFr=15000.06=25,000PV = \frac{CF}{r} = \frac{1500}{0.06} =
25,000PV=rCF=0.061500=25,000
Capital Budgeting
, Q6. A project costs $40,000; cash flows = $12,000/year for 4 years; discount rate =
8%. NPV = ?
A) $4,600
B) $5,000
C) $4,800
D) $4,900
Answer: A) $4,600
Rationale:
NPV=∑12,000(1.08)t−40,000≈4,600NPV = \sum \frac{12,000}{(1.08)^t} - 40,000
\approx 4,600NPV=∑(1.08)t12,000−40,000≈4,600
Q7. Payback period for same project?
A) 3.3 years
B) 3.5 years
C) 3.2 years
D) 3.1 years
Answer: C) 3.2 years
Rationale:
Payback=40,000/12,000≈3.33 yearsPayback = 40,,000 \approx 3.33 \text{
years}Payback=40,000/12,000≈3.33 years
Q8. IRR is defined as:
A) Discount rate making NPV zero
B) Project return > cost of capital
C) Weighted average cost of capital
D) Risk-free rate
Answer: A) Discount rate making NPV zero
Rationale: IRR is the break-even discount rate for NPV.
Q9. If NPV > 0:
A) Accept project
B) Reject project
Assessment (OA) Practice Exam 2025/2026
163 Realistic Questions with Verified Answers &
Detailed Rationales
Comprehensive Study Guide for Time Value of Money, Capital Budgeting, Risk & Return,
Cost of Capital, Financial Ratios, Dividend Policy, and Valuation
Q1. You invest $8,000 at 5% annual interest for 3 years. What is the future value?
A) $9,260
B) $9,410
C) $9,520
D) $9,600
Answer: C) $9,520
Rationale:
FV=PV(1+r)n=8000(1.05)3=9520FV = PV(1 + r)^n = 8000(1.05)^3 =
9520FV=PV(1+r)n=8000(1.05)3=9520
Q2. What is the present value of $15,000 received in 5 years at 6% discount rate?
A) $11,203
B) $11,185
C) $11,220
D) $11,150
Answer: A) $11,203
Rationale:
PV=FV(1+r)n=150001.065≈11,203PV = \frac{FV}{(1 + r)^n} =
\frac{15000}{1.06^5} \approx 11,203PV=(1+r)nFV=1.06515000≈11,203
,Q3. A company invests $12,000 at 8% compounded quarterly for 2 years. FV = ?
A) $14,947
B) $14,900
C) $14,950
D) $14,960
Answer: A) $14,947
Rationale:
FV=12,000(1+0.08/4)4⋅2=12,000(1.02)8≈14,947FV = 12,000(1 + 0.08/4)^{4 \cdot
2} = 12,000(1.02)^8 \approx
14,947FV=12,000(1+0.08/4)4⋅2=12,000(1.02)8≈14,947
Q4. You need $50,000 in 10 years. How much to invest today at 7% annually?
A) $25,650
B) $25,840
C) $25,700
D) $25,900
Answer: B) $25,840
Rationale:
PV=FV(1+r)n=50,0001.0710≈25,840PV = \frac{FV}{(1 + r)^n} =
\frac{50,000}{1.07^{10}} \approx 25,840PV=(1+r)nFV=1.071050,000≈25,840
Q5. A perpetuity pays $1,500 annually. Discount rate = 6%. PV = ?
A) $25,000
B) $24,500
C) $25,500
D) $26,000
Answer: A) $25,000
Rationale:
PV=CFr=15000.06=25,000PV = \frac{CF}{r} = \frac{1500}{0.06} =
25,000PV=rCF=0.061500=25,000
Capital Budgeting
, Q6. A project costs $40,000; cash flows = $12,000/year for 4 years; discount rate =
8%. NPV = ?
A) $4,600
B) $5,000
C) $4,800
D) $4,900
Answer: A) $4,600
Rationale:
NPV=∑12,000(1.08)t−40,000≈4,600NPV = \sum \frac{12,000}{(1.08)^t} - 40,000
\approx 4,600NPV=∑(1.08)t12,000−40,000≈4,600
Q7. Payback period for same project?
A) 3.3 years
B) 3.5 years
C) 3.2 years
D) 3.1 years
Answer: C) 3.2 years
Rationale:
Payback=40,000/12,000≈3.33 yearsPayback = 40,,000 \approx 3.33 \text{
years}Payback=40,000/12,000≈3.33 years
Q8. IRR is defined as:
A) Discount rate making NPV zero
B) Project return > cost of capital
C) Weighted average cost of capital
D) Risk-free rate
Answer: A) Discount rate making NPV zero
Rationale: IRR is the break-even discount rate for NPV.
Q9. If NPV > 0:
A) Accept project
B) Reject project
