Test Bank
Principles Of Corporate Finance
By Richard Brealey, Stewart Myers,
14th Edition
. 1
,Test Bank For Principles Of Corporate Finance, 14e Richard Brealey, Stewart
Myers, Franklin Allen, Alex Edmans, Answers At The End Of Each Chapter
Chapter 1 (1):
1) Mr. Free Has $80 In Income This Year And Will Have Zero Income Next Year. The
Market Interest Rate Is 10 Percent Per Year. If Mr. Free Consumes $20 This Year And
Invests The Rest In The Market, What Will Be Available For His Consumption Next Year?
A) $39
B) $44
C) $66
D) $89
2) Mr. Bird Has $120 In Income This Year And Will Have Zero Income Next Year. The
Market Interest Rate Is 10 Percent Per Year. Mr. Bird Also Has An Investment Opportunity
In Which He Can Invest $60 Today And Receive $102 Next Year. Suppose Mr. Bird
Consumes $30 This Year And Invests In The Project. How Much Will Be Available For
His Consumption Next Year?
A) $113
B) $115
C) $133
D) $135
3) Ms. Venus Has $120 In Income This Year And Will Have $150 Next Year. The Market
Interest Rate Is 10 Percent Per Year. Suppose Ms. Venus Consumes $60 This Year. How
Much Will Be Available For Her Consumption Next Year?
A) $182
B) $216
C) $232
D) $272
4) Mr. Thomas Has $120 In Income This Year And Will Have Zero Income Next Year. The
Market Interest Rate Is 10 Percent Per Year. Mr. Thomas Also Has An Investment
Opportunity In Which He Can Invest $60 This Year And Receive $58 Next Year. Suppose
Mr. Thomas Consumes $50 This Year And Invests In The Project. What Will Be His
Consumption Next Year?
A) $39
B) $44
C) $69
D) $99
. 2
,5) Mr. Dell Has $110 In Income This Year And Will Have Zero Income Next Year. The
Expected Return From Investing In The Stock Market Is 10 Percent A Year. Mr. Dell Also
Has An Investment Opportunity—Having The Same Risk As The Market In Which He Can
Invest $30 This Year And Receive $94 Next Year. Suppose Mr. Dell Consumes $50 This
Year And Invests In The Project. What Is The Npv Of The Investment Opportunity?
A) $0
B) $6
C) $35.45
D) None Of The Options
6) Ms. Delgado Has $80,000 In Income This Year And Will Have $60,000 Next Year. The
Market Interest Rate Is 10 Percent Per Year. Suppose Ms. Delgado Consumes $100,000 This
Year. How Much Will Be Available For Her Consumption Next Year?
A) $38,000
B) $40,000
C) $80,000
D) $90,000
7) Ms. Newcastle Has $60,000 In Income This Year And Will Have $47,000 Next Year. The
Market Interest Rate Is 10 Percent Per Year. Suppose Ms. Newcastle Wishes To Consume
$76,700 Next Year. How Much Will She Be Able To Consume This Year?
A) $26,700
B) $33,000
C) $74,700
D) $84,700
8) Mr. Cobb Has An Income Of $50,000 This Year And Will Have $60,000 Next Year. He Can
Invest In A Project That Costs $40,000 This Year, Which Generates An Income Of $46,000
Next Year. The Market Interest Rate Is 10 Percent. What Will Be Available For His
Consumption Next Year If Mr. Cobb Invests In The Project And Consumes $71,000 This
Year?
A) $50,000
B) $38,900
C) $80,000
D) $48,900
. 3
, Answer Key
Test Name: Chapter 1 (1)
1) C
2) D
3) B
4) C
5) C
6) A
7) B
8) B
. 4
Principles Of Corporate Finance
By Richard Brealey, Stewart Myers,
14th Edition
. 1
,Test Bank For Principles Of Corporate Finance, 14e Richard Brealey, Stewart
Myers, Franklin Allen, Alex Edmans, Answers At The End Of Each Chapter
Chapter 1 (1):
1) Mr. Free Has $80 In Income This Year And Will Have Zero Income Next Year. The
Market Interest Rate Is 10 Percent Per Year. If Mr. Free Consumes $20 This Year And
Invests The Rest In The Market, What Will Be Available For His Consumption Next Year?
A) $39
B) $44
C) $66
D) $89
2) Mr. Bird Has $120 In Income This Year And Will Have Zero Income Next Year. The
Market Interest Rate Is 10 Percent Per Year. Mr. Bird Also Has An Investment Opportunity
In Which He Can Invest $60 Today And Receive $102 Next Year. Suppose Mr. Bird
Consumes $30 This Year And Invests In The Project. How Much Will Be Available For
His Consumption Next Year?
A) $113
B) $115
C) $133
D) $135
3) Ms. Venus Has $120 In Income This Year And Will Have $150 Next Year. The Market
Interest Rate Is 10 Percent Per Year. Suppose Ms. Venus Consumes $60 This Year. How
Much Will Be Available For Her Consumption Next Year?
A) $182
B) $216
C) $232
D) $272
4) Mr. Thomas Has $120 In Income This Year And Will Have Zero Income Next Year. The
Market Interest Rate Is 10 Percent Per Year. Mr. Thomas Also Has An Investment
Opportunity In Which He Can Invest $60 This Year And Receive $58 Next Year. Suppose
Mr. Thomas Consumes $50 This Year And Invests In The Project. What Will Be His
Consumption Next Year?
A) $39
B) $44
C) $69
D) $99
. 2
,5) Mr. Dell Has $110 In Income This Year And Will Have Zero Income Next Year. The
Expected Return From Investing In The Stock Market Is 10 Percent A Year. Mr. Dell Also
Has An Investment Opportunity—Having The Same Risk As The Market In Which He Can
Invest $30 This Year And Receive $94 Next Year. Suppose Mr. Dell Consumes $50 This
Year And Invests In The Project. What Is The Npv Of The Investment Opportunity?
A) $0
B) $6
C) $35.45
D) None Of The Options
6) Ms. Delgado Has $80,000 In Income This Year And Will Have $60,000 Next Year. The
Market Interest Rate Is 10 Percent Per Year. Suppose Ms. Delgado Consumes $100,000 This
Year. How Much Will Be Available For Her Consumption Next Year?
A) $38,000
B) $40,000
C) $80,000
D) $90,000
7) Ms. Newcastle Has $60,000 In Income This Year And Will Have $47,000 Next Year. The
Market Interest Rate Is 10 Percent Per Year. Suppose Ms. Newcastle Wishes To Consume
$76,700 Next Year. How Much Will She Be Able To Consume This Year?
A) $26,700
B) $33,000
C) $74,700
D) $84,700
8) Mr. Cobb Has An Income Of $50,000 This Year And Will Have $60,000 Next Year. He Can
Invest In A Project That Costs $40,000 This Year, Which Generates An Income Of $46,000
Next Year. The Market Interest Rate Is 10 Percent. What Will Be Available For His
Consumption Next Year If Mr. Cobb Invests In The Project And Consumes $71,000 This
Year?
A) $50,000
B) $38,900
C) $80,000
D) $48,900
. 3
, Answer Key
Test Name: Chapter 1 (1)
1) C
2) D
3) B
4) C
5) C
6) A
7) B
8) B
. 4
