Question: 1) If a person is given $1 and invests that $1 for 100 years at 5%, what amount would they be able to withdraw from this account after the 100-year period?
Select one:
a. $90.56
b. $124.57
c. $131.50
d. $156.10
2) If a person needs to have $1,000,000 for retirement in 25 years. How much would they have to invest today at 10% to achieve $1 million in 25 years?
Select one:
a. $57,628
b. $92,296
c. $157,678
d. $201,756
3) If a person were to invest $100 a month for 40 years, how much would they have at the end of 40 years if they received a return of 12%?
Select one:
a. $76,709
b. $576,078
c. $1,176,477
d. $2,305,708
4) If a person was interested in purchasing a company, what would be the break even amount they would need to pay if the returns were $20,000 in the first year, $15,000 in the second year, and $5,000 in the third year (at a cost of capital of 7%)?
Select one:
a. $56,078
b. $40,000
c. $35,874
d. $31,056
5) If you were given an opportunity to invest in a business that provided the returns of the previous question, and you paid $25,000 for the business, what rate of return would that business produce for you?
Select one:
a. 15%
b. 25%
c. 35%
d. 45%
6) If you had $10,000 that you wanted to turn into $15,000 in value, how long would it take this to happen at 7%?
Select one:
a. 3 years
b. 4 years
c. 5 years
d. 6 years
7) What interest rate would you need to receive to turn $40,000 into $250,000 in 20 years?
Select one:
a. 7.3%
b. 9.6%
c. 10.8%
d. 12.7%
8) You have $50,000 currently. You need to have $500,000. You want to make monthly payments into an account for 25 years (assume 10% interest). What amount would you have to invest each month?
Select one:
a. $50.08
b. $77.51
c. $125.26
d. $424.36
9) A security pays $2.50 in dividends, and is a perpetuity. If the payout rate is 10%, what would be the price of this investment?
Select one:
a. $10.00
b. $15.00
c. $20.00
d. $25.00
10) Which financial ratios would best tell you if the company has enough liquidity?
Select one:
a. Debt ratio
b. Times interest earned
c. Average collection period
d. Current ratio
11) Which financial ratio would be used as a comparison to find out if you are paying too much for the goods you are selling?
Select one:
a. Gross profit margin
b. Operating profit margin
c. Net profit margin
d. Return on total assets
12) Which of the following is not a section of a company's annual report?
Select one:
a. Management's discussion of the operations
b. Financial statements
c. Notes to the financial statements
d. The company's tax return
13) Which of the following items would not be included on a balance sheet?
Select one:
a. Cost of goods sold
b. Accounts receivable
c. Accumulated depreciation
d. Notes payable
14) Which of the following activities is not associated with the Statement of Cash Flows?
Select one:
a. Operating activities
b. Long term investing activities
c. Financing activities
d. Inter-company consolidations and mergers
15) A corporation received a bank loan of $500,000, with an annual interest rate at 12%. The corporation's tax rate is 40%. What is the after-tax cost of interest expense?
Select one:
a. $200,000
b. $60,000
c. $36,000
d. $24,000
16) Which of the following activities are not deductible by a corporation for tax purposes?
Select one:
a. Payment of property taxes
b. Payment of bond interest
c. Payment of dividends
d. Payment for office supplies
17) Which of the following statements regarding depreciation are incorrect?
Select one:
a. It is a non-cash expense.
b. It is appropriate for companies who use the cash based system to allocate these costs over the period of time that the asset is in use.
c. It allocated over the useful life of the asset.
d. Often there are two sets of books-one for tax and the other based on straight-line allocation.
18) Which of the following securities would be considered the least risky?
Select one:
a. Mutual fund consists of company stocks in an emerging economy
b. US Treasury Bills
c. Common Stock
d. Bonds in companies that are rated "BB"
19) Which of the following markets would use a negotiated system of trading?
Select one:
a. New York Stock Exchange
b. American Stock Exchange
c. Chicago Board of Trade
d. NASDAQ
20) Which of the following items best illustrate intrinsic value and why a stock is fairly priced in the market today?
Select one:
a. Emotion
b. Fundamentals
c. Efficiency
d. Risk
21) Which one of the following is the greatest risk to investors who invest in U.S. treasury securities?
Select one:
a. Credit risk
b. Inflation risk
c. Political risk
d. Currency risk
22) What happens when interest rates go up over a short period of time?
Select one:
a. Bond prices will also go up
b. Bond prices will go down
c. Dividends of securities will increase
d. Coupon rate will change based on adjusted interest rates.
23) If a firm is capitalized 50% stock and 50% bonds, and the rate of return required for the stock and bonds is 10% and 5% respectively, what would be the firms weighted average cost of capital?
Select one:
a. 15%
b. 10%
c. 7.5%
d. 5%
24) If a firm uses a considerable amount of debt to finance their operations, this would be called which one of the following?
Select one:
a. Prudence
b. Leverage
c. Capitalization
d. Budgeting
25) Which one of the following is not a method used in evaluating capital projects?
Select one:
a. Payback method
b. Internal Rate of Return
c. Net Present Value
d. Single project method
26) Net profit margin can be improved by doing which one of the following?
Select one:
a. Increasing the costs of good sold
b. Decreasing operating expenses
c. Increasing the amount of firm debt
d. Payment of accounts payable
27) What is the most important thing to remember as Christians when managing our finances?
Select one:
a. Get the highest possible return on the assets that are invested
b. Become debt free by paying off our home mortgages quickly
c. To increase our charitable giving
d. To think of all our assets as God's and that we are stewards of these resources