Notes: 1. The face value of a bond is $1,000; 2. Cash flows occur at the end of each period if not otherwise specified; 3. All interest rates (including the M of a bond) are in annual terms if not otherwise specified; 4. There are 20 multiple choice questions; 5. It is mandatory to turn in both the test and the answer sheet. Multiple choice problems (5 points each. Choose the best answer 1. You are offered the opportunity to put some money away for retirement. You will receive four annual payments of $20,000 each beginning in 40 years (note that payments occur at the end of each year). How much would you have to invest today if you expect an interest rate of 5% annually? A) $8,526.78 B) $2,840.91 C) $10,073.74 D) $11,363.65 2. How much must be invested today in order to generate a five-year annuity of S1,000 per year, with the first payment one year from today, at an interest rate of 12%? A) $3,604.78 B) $3,746.25 C) $4,037.35 D) $4,604.78 3. Net working capital refers to: A) current assets and current liabilities; B) the difference between current assets and current liabilities; C) assets with a short life; D) liabilities with a short life. 4. A firm's average tax rate is 20%. Its net income is $2,000. Its interest expense is $1,000. What is the EBIT of the firm? A) $2,500 B) $3,500 C) $4,500 D) $5,500 5. You want to purchase a new car, and you are willing to pay $30,000. If you can invest at 6% per year and you currently have S20,000, how long will it be before you