1. A firm has Days in Inventory of 56 days, DSO of 32 days, and Days in Payables of 68 days. It's cash Conversion Cycle is ____ days.

20

70

50

80

2. A bond matures in exactly 12 years. It has a par value of $1,000, a coupon rate of 5.6%, and makes two interest payments per year. If the market rate of interest were to be 5.8%, what would the value of the bond be?

983

1,013

979

some other amount

3. A firm is considering only 2 projects, both of which have a positive NPV. The firm only has enough capital to invest in one project. The firm should select the project with the shortest payback period.

True

False

4. A firm's WACC is often referred to as the 'hurdle rate' for new project profitability. All new projects must earn at least the firm WACC in order to add value to the company.

True

False

5. Bank A offers a higher interest rate than Bank B. If you want to deposit a single amount of money today and have it grow to $10,000 in 5 years, you would have to deposit less money in Bank B than you would have to in Bank A in order to achieve your goal.

True

False

6. A firm's WACC is often referred to as the 'hurdle rate' for new project profitability. All new projects must earn at least the firm WACC in order to add value to the company.

True

False

7. A bank account pays 5.80% APR with monthly compounding. What is the Effective Annual Rate ('Yield') of this account?

8. Our U.S. company has an account payable denominated in JPY, and an account receivable denominated in CHF. The risk we face in respect to these is that:

the USD appreciates against the JPY and the USD depreciates against the CHF.

both the JPY and CHF appreciate against the USD by the same amount

the JPY depreciates and the CHF appreciates against the USD.

the JPY appreciates, and the CHF depreciates against the USD.

9. You invest $5900 in a savings account earning 4.30% with monthly compounding. How many years will it take for that amount to grow to $19400. Round your answer to the nearest whole number.