9. Florence would like to establish a trust fund that will provide $20,000 a year forever for his heirs (with the first payment accusing a year from today). The fund is expected to earn annual returns of 5%, compounded annually. How much money does Florence need to invest today to provide these gifts for his heirs?

Select one:

1. $440,000

2. $300,000

3. $210,000

4. $400,000

5. $350,000

10. What is the annual percentage rate (APR) on a loan with a stated rate of 0.5% per month?

Select one:

1. 6.17%

2. 6.00%

3. 24.41%

4. 0.5%

5. 0.51%

11. Tommy will sign a contract as an IT Consultant at a local Technology firm. The position will pay Tommy $82,000 for the next 3 years (with the first payment taking place one year from today, and the third and last payment taking place 3 years from now.). Given a discount rate of 9.5% how much is the position worth to Tommy today?

Select one:

1. $209,208.37

2. $162,556.16

3. $211,417.06

4. $205,730.36

5. $213,918.01

12. Which of the following would be considered a capital budgeting decision for a firm?

Select one:

1. Deciding on how to deal with high employee turnover

2. Deciding on whether to open a new store in a new market

3. Deciding on how many shares to issue to the public

4. Deciding on the amount of debt a firm issues to the public

5. Deciding on the accounting treatment of intellectual Property (IP)

13. Polo won an interesting lottery that gives him a few different possible prizes to choose from. Using a market interest rate of 5%, which option should Paolo choose such that he receives the maximum payoff

Select one:

1. A single payment of $85,000 received in 2 years

2. All the payments stated are equally good

3. $7,500 per year for 9 years, starting today.

4. A growing perpetuity that pays $2,500 each year starting two years from now. The perpetuity grows at a rate of 1.4% per year.

5. One payment of $55,000 received today