FIN 515 Midterm Exam Solution http://www.homeworkwarehouse.com/downloads/fin-515-midterm-exam- solution/ FIN 515 Midterm Exam Solution Question 1. (TCO G) The firm's asset turnover measures Question 2. (TCO G) If Moon Corporation has an increase in sales, which of the following would result in no change in its EBIT margin? Question 3. (TCO B) You plan on retiring in 20 years. You currently have $275,000 and think you will need $1,000,000 to retire. Assuming you don’t deposit any additional money into the account, what annual return will you need to earn to meet this goal? Question 4. (TCO B) You take out a 4 year car loan for $18,000. The loan has a 4% annual interest rate. The payments are made monthly. What are the monthly payments? Show your work. Question 5. (TCO B) You currently have $10,000 in your retirement account. If you deposit $500 per month and the account pays 5% interest, how much will be in the account in 10 years? Show your work. Question 6. (TCO B) You have a two children, A and B. Child A is not going to college but is working in a business to learn the ropes. Child A plans on opening a business someday. Child B is attending college. You put a certain amount of money into an account. From this account, Child B will receive $2,000 per month for the next four years. Whatever is left at that time will go to Child A to
FIN 515 Midterm Exam
Solutionhttp://www.homeworkwarehouse.com/downloads/fin-515-midterm-exam-solution/
FIN 515 Midterm Exam Solution
Question 1. (TCO G) The firm's asset turnover measures
Question 2. (TCO G) If Moon Corporation has an increase in
sales, which of the following would result in no change in its EBIT
margin?
Question 3. (TCO B) You plan on retiring in 20 years. You
currently have $275,000 and think you will need $1,000,000 to
retire. Assuming you dont deposit any additional money into the
account, what annual return will you need to earn to meet this
goal?
Question 4. (TCO B) You take out a 4 year car loan for $18,000.
The loan has a 4% annual interest rate. The payments are made
monthly. What are the monthly payments? Show your work.
Question 5. (TCO B) You currently have $10,000 in your
retirement account. If you deposit $500 per month and the account
pays 5% interest, how much will be in the account in 10 years? Show
your work.
Question 6. (TCO B) You have a two children, A and B. Child A is
not going to college but is working in a business to learn the
ropes. Child A plans on opening a business someday. Child B is
attending college. You put a certain amount of money into an
account. From this account, Child B will receive $2,000 per month
for the next four years. Whatever is left at that time will go to
Child A to
help start the business. You want Child A to receive $96,000 at
that time. The account pays 7% annually, compounded monthly. How
much money do you need to start the account? Show your work.
Question 7. (TCO F) A project requires an initial cash outlay of
$40,000 and has expected cash inflows of $12,000 annually for 7
years. The cost of capital is 10%. What is the projects NPV? Show
your work.
Question 8. (TCO F) A project requires an initial cash outlay of
$60,000 and has expected cash inflows of $15,000 annually for 8
years. The cost of capital is 10%. What is the projects payback
period? Show your work.
Question 9. (TCO F) A project requires an initial cash outlay of
$95,000 and has expected cash inflows of $20,000 annually for 9
years. The cost of capital is 10%. What is the projects IRR? Show
your work.
Question 10. (TCO F) A project requires an initial cash outlay
of $40,000 and has expected cash inflows of $12,000 annually for 7
years. The cost of capital is 10%. What is the projects discounted
payback period? Show your work.
Question 11. (TCO F) Company A has the opportunity to do any,
none, or all of the projects for which the net cash flows per year
are shown below. Projects A and C can be done together. Projects B
and C can be done together. But Projects A and B are mutually
exclusive. The company has a cost of capital of 18%. Which should
the company do and why? You must use at least two capital budgeting
methods. Show your work. A B C0 -500 -500 -6001 200 -200 1002 200
600 100
