QUESTION 1

1. The modified internal rate of return:

   		is computed by combining cash flows until only one change in sign remains.
   		applies only to profitability calculations.
   		is used to make accept/reject decisions when no discount rate can be assigned.
   		is used as the discount rate for all NPV calculations.
   		assumes all projects are financing projects.

Ginger borrowed $300,000 at 4.5%. Her loan is for 10 years. How much will her monthly payment be?

	a.	$37,913.65
	b.	$13,568.96
	c.	$30,622.22
	d.	$3,109.15
	e.	None of these are correct

How much money will Slats Slattery accumulate at the end of twenty years if he presently has $100,000 and plans to invest $50,000 per year for the next ten years? He can earn 4.25% on his investments.

	a.	$690,923.30
	b.	$920,813.94
	c.	$1,150,704.57
	d.	$758,932.59
	e.	None of these are correct

Lucky just won the Power Ball lottery for $300,000,000. She has the option of receiving a $10,000,000 annuity for the next 30 years beginning today or a lump sum payment of $135,000,000 today. If she can earn 6.5% on her investments, which choice offers the highest financial yield at the end of 30 years?

	a.	Lump Sum
	b.	Annuity

Monk Manley needs $40,000 to buy a new car. Slick Nick has offered to lend him the money if he agrees to repay $1,175 per month for the next 4 years. What annual interest rate is being charged on the loan?

	a.	18.88%
	b.	1.50%
	c.	15.32%
	d.	18.00%
	e.	None of these are correct

1. Horseman Pileggi borrowed $25,000 at a rate of 5% and must repay it in four equal installments at the end of each of the next 4 years. By how much would he reduce the amount he owes in the first year?

   	a.	$471.57
   	b.	$7,050.30
   	c.	$1,250.00
   	d.	$5,800.30
   	e.	None of these are correct

1. You are the financial analyst for the Glad Its Finally Over Company. The director of capital budgeting has asked you to analyze a proposed capital investment. The project has a cost of $35,000 and the cost of capital is 7.5%. The projects expected net cash flows are as follows:

   Data for Problems 11 15

   Year	Expected Net Cash Flow
   0	($35,000)
   1	$14,500
   2	$11,000
   3	$11,000
   4	$5,000

   If the cash inflows are received throughout the year, the payback period given this scenario is _____ years (Fill in the blank with your calculation result of two decimal places).

5 points

QUESTION 17

1. You are the financial analyst for the Glad Its Finally Over Company. The director of capital budgeting has asked you to analyze a proposed capital investment. The project has a cost of $35,000 and the cost of capital is 7.5%. The projects expected net cash flows are as follows:

   Data for Problems 11 15

   Year	Expected Net Cash Flow
   0	($35,000)
   1	$14,500
   2	$11,000
   3	$11,000
   4	$5,000

   If the cash inflows are received throughout the year, the projects discounted payback period is ___ years (Fill in the blank with your calculation result of two decimal places).

5 points

QUESTION 18

1. You are the financial analyst for the Glad Its Finally Over Company. The director of capital budgeting has asked you to analyze a proposed capital investment. The project has a cost of $35,000 and the cost of capital is 7.5%. The projects expected net cash flows are as follows:

   Data for Problems 11 15

   Year	Expected Net Cash Flow
   0	($35,000)
   1	$14,500
   2	$11,000
   3	$11,000
   4	$5,000

   The projects Net Present Value is $_______, (rounded to 2 decimal places)

5 points

QUESTION 19

1. You are the financial analyst for the Glad Its Finally Over Company. The director of capital budgeting has asked you to analyze a proposed capital investment. The project has a cost of $35,000 and the cost of capital is 7.5%. The projects expected net cash flows are as follows:

   Data for Problems 11 15

   Year	Expected Net Cash Flow
   0	($35,000)
   1	$14,500
   2	$11,000
   3	$11,000
   4	$5,000

   The projects Internal Rate of Return is ______%, (rounded to 2 decimal places)

5 points

QUESTION 20

1. You are the financial analyst for the Glad Its Finally Over Company. The director of capital budgeting has asked you to analyze a proposed capital investment. The project has a cost of $35,000 and the cost of capital is 7.5%. The projects expected net cash flows are as follows:

   Data for Problems 11 15

   Year	Expected Net Cash Flow
   0	($35,000)
   1	$14,500
   2	$11,000
   3	$11,000
   4	$5,000

   The projects modified Internal Rate of Return is ______%, (rounded to 2 decimal places).