1. Adrian Ardell is saving for a new guitar. How much must Adrian set aside now to receive $4000, 7 years from now using a compound interest rate of 7% annually?

a. 2400

b. 2491

c. 2411

d. 2500

e. None of the above

2. Ellison Corporation acquires Redstone Corporation because Redstone has unused production facilities that Ellison needs. This is an example of

A) Diversification

B) Vertical integration

C) Horizontal integration

D) None of the above

3. Which of the following methods helps to “size” the investment?

a. Payback

b. Present Value payback

c. Present value index

d. IRR

e. None of the above

4. Timing issues involve:

a. the costs of the alternatives forms of capital

b. sequencing the alternatives, once funding amount are known

c. none of the above

d. A and B

5. Which of the following ratios makes firm comparison difficult?

a. EPS

b. Payout

c. Return on assets

d. ROE

e. None of the above

6. If Carla Rice puts $200 in the bank for nine years and the money compounds at 7% annually how much will Carla have at the end of nine years?

a. $362

b. $368

c. $374

d. $381

e. None of the above