Net Present Value and Percent
Fin 3320
Practice Questions1 – Total Course
1. Your wealthy uncle has set up a special account that will give you $500,000 on your 35th birthday. Assuming you are age 21 (thus 14 years from receiving this), what is the present value of this gift if the appropriate discount rate is 8.0%? (Ch5)
a. $170,231
b. $282,449
c. $442,619
d. $191,206
e. $734,664
2. You need $10,900 for the down payment on a new car. You presently have $5,000 in savings for which you expect to earn 6% (annual rate, compounded monthly). If you deposit a further $500 each month to this account, how long, approximately, before you will accumulate enough to meet your down payment requirement? (Ch6)
a. 17.6 Years
b. 8 Months
c. 11 Months
d. 16 Months
e. 1.84 Years
3. Which of the following are included in current liabilities? (Ch2)
I. note payable to a supplier in eight months
II. amount due from a customer in 30 days
III. account payable to a supplier that is due next week
IV. loan payable to the bank in sixteen months
A. I and III only
B. II and III only
C. I, II, and III only
D. I, III, and IV only
E. I, II, III, and IV
4. ABC Inc. has net working capital of $360; current liabilities of $190. What is the Current
Ratio? (Ch3)
a. 0.3
b. 0.5
c. 1.9
d. 2.1
e. 2.9
1
Intentionally limited to computational questions. “Concept” type questions excluded.
1
5. You just got lucky and won $80,000 on a TV game show. You wonder if this will be adequate to fund your retirement in 40 years. You can conservatively invest the money and earn 4.0% (compounded annually) during this period. How much will your game show winnings be worth upon your retirement date? (Ch5)
a. $345,346
b. $268,943
c. $223,990
d. $384,082
e. $521,016
6. You are considering the purchase of a new car with a price of $48,200. You can make a down payment of $10,000 and finance the remaining balance over 5 years (60 months) at
6.0%. You wonder if you can afford the monthly payments. How much will the monthly payment be? (Ch6)
a. $1,082
b.
Practice Questions1 – Total Course
1. Your wealthy uncle has set up a special account that will give you $500,000 on your 35th birthday. Assuming you are age 21 (thus 14 years from receiving this), what is the present value of this gift if the appropriate discount rate is 8.0%? (Ch5)
a. $170,231
b. $282,449
c. $442,619
d. $191,206
e. $734,664
2. You need $10,900 for the down payment on a new car. You presently have $5,000 in savings for which you expect to earn 6% (annual rate, compounded monthly). If you deposit a further $500 each month to this account, how long, approximately, before you will accumulate enough to meet your down payment requirement? (Ch6)
a. 17.6 Years
b. 8 Months
c. 11 Months
d. 16 Months
e. 1.84 Years
3. Which of the following are included in current liabilities? (Ch2)
I. note payable to a supplier in eight months
II. amount due from a customer in 30 days
III. account payable to a supplier that is due next week
IV. loan payable to the bank in sixteen months
A. I and III only
B. II and III only
C. I, II, and III only
D. I, III, and IV only
E. I, II, III, and IV
4. ABC Inc. has net working capital of $360; current liabilities of $190. What is the Current
Ratio? (Ch3)
a. 0.3
b. 0.5
c. 1.9
d. 2.1
e. 2.9
1
Intentionally limited to computational questions. “Concept” type questions excluded.
1
5. You just got lucky and won $80,000 on a TV game show. You wonder if this will be adequate to fund your retirement in 40 years. You can conservatively invest the money and earn 4.0% (compounded annually) during this period. How much will your game show winnings be worth upon your retirement date? (Ch5)
a. $345,346
b. $268,943
c. $223,990
d. $384,082
e. $521,016
6. You are considering the purchase of a new car with a price of $48,200. You can make a down payment of $10,000 and finance the remaining balance over 5 years (60 months) at
6.0%. You wonder if you can afford the monthly payments. How much will the monthly payment be? (Ch6)
a. $1,082
b.