1. You want to take a vacation in 4 years and feel you’ll need $8,500 to do so. If you can earn 5% on your deposits, how much will you need to deposit in each of the next four years to have the needed amount? PMT = 1972.10058
2. What is the effective annual rate on a credit card that states that their APR is 21%, compounded monthly? 23.144% 3. What is the present value of $1,000 to be received 2 years from now using a discount rate of 5%, with continuous compounding? PV = 904.83742
4. What is the future value of $1,000 three years from now at a rate of 6%, continuously compounded? FV = 1197.22
5. Shareholder wealth is measured by the MARKET VALUE of the shareholders' common stock holdings.
6. A big company had an operating income (EBIT) of $260,000 last year. The firm had $48,000 in depreciation expenses, $15,000 in interest expenses, and $40,000 in selling, general, and administrative expenses. If the company has a marginal tax rate of 40 percent, what was its after-tax income for last year? NI = 147,000
7. Calculate the present value of an annuity due which pays you $50 annually for 5 years using a discount rate of 6%. PV = 223.26
8. You have an investment that pays you $5000 annually forever. If the initial deposit earns 8%, what was the initial deposit? $62500
9. LMN Corp’s dividends have grown from $1.85 to $2.15 over the last 5 years. What is the growth rate in dividends? I/Y = 3.05%
10. Your credit card bill states that your APR is 18%. You are paying monthly at a rate of 1.5% on your balances, so interest is compounding monthly. What is the effective annual interest rate? (Set your calculator to 4 decimals). 19.56%
11. According to the rule of 72, if my investment is earning 9% annually, it will take ______ years for me to double my money.
12. AGENCY problems arise from the divergent objectives between owners and managers.