1. A firm should attempt to use assets effectively to create value. Which of the following best describes the goal of the financial manager in a public company?

A. Maximize sales

B. Maximize the current value per share of the existing stock. C. Maximize profits. D. Avoid financial distress. E. Maintain steady earnings growth.

2. A negative net present value indicates that:

A. A project's cash inflows must be less than the project's initial cost.

B. A project's initial cash outflow is greater than the present value of the project's cash inflows.

C. A project is acceptable.

D. The discount rate is greater than the current market rate of return.

E. The discount rate applied to the project is less than the project's internal rate of return.

(3)You signed an employee contract with Facebook which promises to pay you $20,000 a year for eight years. The payments occur on the first day of each year. What kind of cash flow it is and what is the value of this cash flow today at a 5% discount rate, monthly compounding?

A. Annuity due. $135,727.47

B. Annuity due. $135,309.23

C. Ordinary annuity. $129,264.26

D. Ordinary annuity. $128,743.43

E. Annuity due. $128,743.43