Answers only please

QUESTION 1

1. You are given the following information for Lowell, Inc.

Sales240,000

Debt110,000

Dividends5,000

Equity30,000

Interest rate7%

Net income16,000

Tax rate30%

Assume the company has no short-term debt. Also assume that all asset turnover, profit margin, and dividend payout ratios remain constant. (Hint: Prepare income statement working backwards from the bottom.)

1. What are the company's earnings before interest and taxes (EBIT)?
2. A.27,057
3. B.27,757
4. C.28,457
5. D.29,157
6. E.29,857
7. F.30,557
8. G.31,257
9. H.31,957

5 points

QUESTION 2

1. The Falmouth Corporation has current assets of $200,000. If the current ratio is 2.5 and the quick ratio is 1.50, what is the value of the inventory?
2. A.104,000
3. B.96,000
4. C.88,000
5. D.80,000
6. E.72,000
7. F.64,000
8. G.56,000
9. H.48,000

5 points

QUESTION 3

1. You are planning to purchase your first house with a down payment of $95,000. Currently, you have $20,000 in the bank which earns interest at 8% compounded monthly. How manyyearswill you have to wait before you can afford the down payment for the house?
2. A.13.78
3. B.14.78
4. C.15.71
5. D.16.58
6. E.17.39
7. F.18.15
8. G.19.54
9. H.20.80

5 points

QUESTION 4

1. Fast Growth Investment Company offers an investment that promises to triple your money in 39 months. This investment promises to credit interest to your account every quarter, that is, the interest is compounded quarterly. What annual percentage rate (APR) must the investment earn to meet the promised return? (Hint: Find quarterly rate first.)
2. A.80.37%
3. B.67.97%
4. C.51.93%
5. D.35.27%
6. E.103.97%
7. F.87.61%
8. G.75.68%
9. H.45.01%

5 points

QUESTION 5

1. You plan to retire when you have $1,000,000 in savings.You can make a deposit of $3,000 per quarter into a retirement saving account that pays 12 percent annual interest rate compounded quarterly. How manyyearswill you have to wait to retire?
2. A.37.74 years
3. B.34.77 years
4. C.31.41 years
5. D.29.04 years
6. E.27.22 years
7. F.24.51 years
8. G.22.52 years
9. H.20.28 years

5 points

QUESTION 6

1. You plan to retire with $1,000,000 savings. How much should you depositquarterlyinto a retirement saving account that pays 14 percent annual interest if you plan to retire in 20 years? (Note: Compounding matches the deposit frequency. Answers are rounded.)
2. A.$5,089
3. B.$2,385
4. C.$1,159
5. D.$573
6. E.$1,651
7. F.$769
8. G.$371
9. H.$182

5 points

QUESTION 7

1. You plan to purchase a car.The dealer is offering special financing at an annual percentage rate (APR) of 12 percent for 100 percent of the car value. The inflation premium is 3.5 percent.If the pure rate in the market is 3 percent, what is the risk premium? (Please using the exact, multiplicative formulation for interest rates.)
2. A.1.78%
3. B.2.25%
4. C.2.72%
5. D.3.18%
6. E.3.65%
7. F.4.12%
8. G.4.59%
9. H.5.06%

5 points

QUESTION 8

1. The real rate is 2.8 percent and the nominal rate is 6.3 percent.What is the expected inflation premium? Please use the exact (multiplicative) formulation.
2. A.2.63%
3. B.3.40%
4. C.4.18%
5. D.4.96%
6. E.5.74%
7. F.6.52%
8. G.7.30%
9. H.8.07%

5 points

QUESTION 9

1. You invest $9,000 into a savings account that pays an annual interest rate of 11.5%. How much would you have in your account after 12 years?
2. A.$20,549
3. B.$24,010
4. C.$27,272
5. D.$30,343
6. E.$33,231
7. F.$35,942
8. G.$38,483
9. H.$40,861

QUESTION 11

1. Bank A pays 18.0% interest compounded semi-annually (i.e. every six months), while Bank B pays 17.5% interest compounded daily.Which of the following represent the actual annual returns earned in Bank A and Bank B?
2. A.18.81% and 19.00%
3. B.18.81% and 19.12%
4. C.19.03% and 19.24%
5. D.19.14% and 19.24%
6. E.19.25% and 19.48%
7. F.19.25% and 19.60%
8. G.19.46% and 19.72%
9. H.19.57% and 19.72%