Answer Options:
a. If you have a series of cash flows, each of which is positive, you can solve for I, where the solution value of I causes the PV of the cash flows to equal the cash flow at Time 0.
b. If you have a series of cash flows, and CF0 is negative but each of the following CFs is positive, you can solve for I, but only if the sum of the undiscounted cash flows exceeds the cost.
c. To solve for I, one must identify the value of I that causes the PV of the positive CFs to equal the absolute value of the FV of the negative CFs. This is, essentially, a trial-and-error procedure that is easy with a computer or financial calculator but quite difficult otherwise.
d. If you solve for I and get a negative number, then you must have made a mistake.
e. If CF0 is positive and all the other CFs are negative, then you cannot solve for I.
Answer:
c
Question: A $150,000 loan is to be amortized over 7 years, with annual end-of-year payments. Which of these statements is CORRECT? a. The annual payments would be larger if the interest rate were lower. b. If the loan were amortized over 10 years rather than 7 years, and if the interest rate were the same in either case, the first payment would include more dollars of interest under the 7-year amortization plan. c. The proportion of each payment that represents interest as opposed to repayment of principal would be higher if the interest rate were lower. d. The proportion of each payment that represents interest versus repayment of principal would be higher if the interest rate were higher. e. The proportion of interest versus principal repayment would be the same for each of the 7 payments.
Answer:
d. The proportion of each payment that represents interest versus repayment of principal would be higher if the interest rate were higher.
Question: Disregarding risk, if money has time value, it is impossible for the future value of a given sum to exceed its present value. True False
Answer:
False
Question: One bed is available on the inpatient eating disorders unit. Which patient experiencing a weight should be admitted? a. 150 to 100 pounds over a 4-month period. Vital signs: temperature, 35.9° C; pulse, 38 beats/min; blood pressure, 60/40 mm Hg. b. 120 to 90 pounds over a 3-month period. Vital signs: temperature, 36° C; pulse, 50 beats/min; blood pressure, 70/50 mm Hg. c. 110 to 70 pounds over a 4-month period. Vital signs: temperature, 36.5° C; pulse, 60 beats/min; blood pressure, 80/66 mm Hg. d. 90 to 78 pounds over a 5-month period. Vital signs: temperature, 36.7° C; pulse, 62 beats/min; blood pressure, 74/48 mm Hg.
Answer Options:
a. 150 to 100 pounds over a 4-month period. Vital signs: temperature, 35.9° C; pulse, 38 beats/min; blood pressure, 60/40 mm Hg.
b. 120 to 90 pounds over a 3-month period. Vital signs: temperature, 36° C; pulse, 50 beats/min; blood pressure, 70/50 mm Hg.
c. 110 to 70 pounds over a 4-month period. Vital signs: temperature, 36.5° C; pulse, 60 beats/min; blood pressure, 80/66 mm Hg.
d. 90 to 78 pounds over a 5-month period. Vital signs: temperature, 36.7° C; pulse, 62 beats/min; blood pressure, 74/48 mm Hg.
Answer:
A
Question: A start-up firm is making an initial investment in new plant and equipment. Assume that currently its equipment must be depreciated on a straight-line basis over 10 years, but Congress is considering legislation that would require the firm to depreciate the equipment over 7 years. If the legislation becomes law, which of the following would occur in the year following the change? A) The firm’s operating income (EBIT) would increase. B) The firm’s taxable income would increase. C) The firm’s cash flow would increase. D) The firm’s tax payments would increase. E) The firm’s reported net income would increase.
Answer:
C
Question: Which of the following statements is most correct? A) Nantell’s taxable income will be lower. B) Nantell’s operating income (EBIT) will increase. C) Nantell’s cash position will improve (increase). D) Nantell’s reported net income for the year will be lower. E) Nantell’s tax liability for the year will be lower.
Answer:
B
Question: What behavior by a nurse caring for a patient diagnosed with an eating disorder indicates the nurse needs supervision? a. The nurse’s comments are compassionate and nonjudgmental. b. The nurse uses an authoritarian manner when interacting with the patient. c. The nurse teaches the patient to recognize signs of increasing anxiety and ways to intervene. d. The nurse refers the patient to a self-help group for individuals with eating disorders.
Answer Options:
a. The nurse’s comments are compassionate and nonjudgmental.
b. The nurse uses an authoritarian manner when interacting with the patient.
c. The nurse teaches the patient to recognize signs of increasing anxiety and ways to intervene.
d. The nurse refers the patient to a self-help group for individuals with eating disorders.
Answer:
B
Question: If a dollar will buy fewer units of a foreign currency in the forward market than in the spot market, then the forward currency is said to be selling at a premium to the spot rate. a. True b. False
Answer:
a. True
Question: A lockbox plan is most beneficial to firms that a. have suppliers who operate in many different parts of the country. b. have widely dispersed manufacturing facilities. c. have a large marketable securities portfolio, and cash, to protect. d. receive payments in the form of currency, such as fast food restaurants, rather than in the form of checks.
Answer Options:
a. have suppliers who operate in many different parts of the country.
b. have widely dispersed manufacturing facilities.
c. have a large marketable securities portfolio, and cash, to protect.
d. receive payments in the form of currency, such as fast food restaurants, rather than in the form of checks.
Answer:
a
Question: Which of the following statements is CORRECT, assuming positive interest rates and holding other things constant? a. The present value of a 5-year, $250 annuity due will be lower than the PV of a similar ordinary annuity. b. A 30-year, $150,000 amortized mortgage will have larger monthly payments than an otherwise similar 20-year mortgage. c. A bank loan’s nominal interest rate will always be equal to or less than its effective annual rate. d. If an investment pays 10% interest, compounded annually, its effective annual rate will be less than 10%. e. Banks A and B offer the same nominal annual rate of interest, but A pays interest quarterly and B pays semiannually. Deposits in Bank B will provide the higher future value if you leave your funds on deposit.
Answer:
b. A 30-year, $150,000 amortized mortgage will have larger monthly payments than an otherwise similar 20-year mortgage.
Question: Which of the following statements is CORRECT? a. The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods. b. If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity. c. The cash flows for an annuity due must all occur at the ends of the periods. d. The cash flows for an annuity must all be equal, and they must occur at regular intervals, such as once a year or once a month. e. If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as a variable annuity.
Answer:
d. The cash flows for an annuity must all be equal, and they must occur at regular intervals, such as once a year or once a month.