Please answer all

(TVM) Which statement below is true of level (non-growing) perpetuities (part of time value of money analysis)?

• A. A level perpetuity is always a future value of an annuity application.
• B. A level perpetuity is simple to analyze because the principal stays intact and only the interest is spent or withdrawn.
• C. The present value of a level perpetuity cannot be computed because infinity is not an actual number that we can use in computations.
• D. All of the above are true.
• E. None of the above is true.

(Fin. Stmts.) Which of the following decreases a firms cash flow?

• A. An increase in accounts payable
• B. A decrease in accounts receivable
• C. A repayment of an outstanding loan
• D. A sale of old equipment for salvage value
• E. None of the above

(Fin. Mkts. Int. Rates) If the Federal Reserve wants to put downward pressure on interest rates, it can:

• A. increase the discount rate
• B. increase reserve requirements
• C. buy securities in open market operations
• D. All of the above

(Intl Fin.) If the purchasing power parity holds and an item cost $250 in the US and 225 in Germany, what is the exchange rate between dollar and euro?

• A. $1/
• B. $1.1111/
• C. $0.9/
• D. 1.25/$
• E. None of the above

Which of the following statements regarding various aspects of our finance review is the most correct?

• A. The lenders to a large corporation generally provide the hands-on management of operations.
• B. An investment project with a negative net present value is unacceptable.
• C. Existing bonds rise in value when interest rates in the lending market increase.
• D. Internal rate of return is the discount rate that causes a projects net present value to be $0.
• E. A common stockholder will receive the same dividends every year until the shares mature.

(TVM) If Mr. Q makes a $2,000 annual deposit into a savings account with a 6% compounded annual rate of interest at the start of each year, what will his balance be after 9 years have passed? Hint: use the Basic Time Value of Money table attached to this quiz or a financial calculator.

• A. $26,361.59
• B. $21,200.00
• C. $24,361.59
• D. $14,419.59
• E. $22,982.63