Question 56

Compounding is the process of finding the present value of some future amount.

Select one:

True

False

Question 57

Sales divided by net income is referred to as the profit margin.

Select one:

True

False

Question 58

This morning, Alicia bought a ten-year 9% coupon bond that pays interest semi-annually. She paid $994 for a $1,000 bond. If the market interest rate on this type of bond declines to 8.5% tonight, how much will Alicia receive for her first interest payment?

Select one:

a. $90.00

b. $45.00

c. $46.29

d. $32.31

e. $69.58

Question 59

A firm earns net income of $125,000 in a given year and the firm's retained earnings increase $100,000 for that same year. The payout ratio is:

Select one:

a. 60%

b. 80%

c. 20%

d. 40%

e. 100%

Question 60

Suppose a project costs $375 and produces cash flows of $100 over each of the following six years. What is the IRR of the project?

Select one:

a. 10.0%

b. 15.3%

c. There is not enough information; a discount rate is required

d. 18.6%

e. 13.0%