1. If the interest rate is zero, the future value interest factor equals_____.

A. 0.0 B. 1.0

C. 1.0 D. 2.0

2. Included in the primary activities of the financial manager are

A. analyzing and planning cash flows. B. making investment decisions. C. all of the above. D. financial analysis and planning.

3. How long would it take for you to save an adequate amount for retirement if you deposit $40,000 per year into an account beginning one year from today that pays 12 percent per year if you wish to have a total of $1,000,000 at retirement?

A. 15.5 years B. 15.0 years C. 16.5 years D. 14.5 years

4. Wassay has the option to accept any of the following offers. Which one will he choose?

A. A perpetuity that will pay $3000 annually, starting 5 years from now, at a discount rate of 2% B. A perpetuity that pays him $1000 annually at a discount rate of 2%, with the first cashflow being received this year C. An annuity that will pay him $5000 annually for the next 30 years, at a discount rate of 5% D. A growing annuity that will pay him $5000 in the first year and will grow by 5% in each of the following years for 50 years, at a discount rate of 10%