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Strongly Agree Agree Neutral Disagree Strongly Disagree

Knowledge is of two kinds. We know a subject ourselves, or we know where we can find information on it. I like this quote-. Strongly Agree Agree Neutral Disagree Strongly Disagree.

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Strongly Agree Agree Neutral Disagree Strongly Disagree

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  1. Knowledge is of two kinds. We know a subject ourselves, or we know where we can find information on it.I like this quote- • Strongly Agree • Agree • Neutral • Disagree • Strongly Disagree

  2. You tell your sister, “If you move out today, I will buy you a car valued at $10,000 when you turn 18."  Your sister is 16 years old.  If you receive a 10% annual return, how much money do you have to set aside today to be able to buy your sister a car when she is 18? • $8,264.46 • $9,264.46.43 • $7,264.46 • $11,264.46

  3. You are using outdated equipment in the plant that costs $12,000 per machine per year to maintain.  You could buy new equipment for $30,000 per machine.  The new machines would cost $5,000 per year to maintain.  If both old and new machines have a remaining life of 10 years, should you replace the machines?  You would like a 9% annual return.  • Yes, pv benefit $54,923,60 • No, $24,923.60 • No, $34,923.60 • Yes, $44,923.60

  4. You are using outdated equipment in the plant that costs $12,000 per machine per year to maintain.  You could buy new equipment for $30,000 per machine.  The new machines would cost $5,000 per year to maintain.  If both old and new machines have a remaining life of 10 years, should you replace the machines?  You would like a 9% annual return.  • Yes, 19.36% • No, 9.36% • Yes, 17.36% • No, 7.36%

  5. Your rich aunt will be giving you $336,740.  Unfortunately, she thinks that you are not mature enough to receive the money today, so the $336,740 will be given to you in eight years.  Assume a 9% discount rate.  What is the value of the gift today? • $158,998.45 • $168,998.45 • $178,998.45 • $188,998.45

  6. Your property taxes have just increased by $800 per year (payable at the end of the year).  You make it a point to have the present value of the property taxes for the next three years set aside in an account.  The account returns 5% annually.  How much should be added to the account to assure that the property taxes for the next three years are paid? • $2,178.60 • $2,278.60 • $2,378.60 • $2,478.60

  7. Seven years ago you bought shares of Cisco Systems for $12.00 per share today you sold the shares for $36.00.  What was your annual rate of return (assume no dividends, no commissions)? • 14.99% • 15.99% • 16.99% • 18.00%

  8. Fourteen years ago, you bought a Barry Bonds baseball card for 40 cents.  You expect to sell the card next year for $1,000.  What would be your annual rate of return?  • 58.47% • 63.47% • 68.47% • 73.47%

  9. The past five years you have been managing the family fortune that was left to you by your grandparents-- value $10,000,000 (10 years ago).  Unfortunately, the assets have been decreasing at a rate of 6% per year.  You promised your family that you would let someone else manage the assets if the investments ever fell to one-half the original value.  If you keep losing money at 6% per year, how many years do you have left before you give up your money management position?  • 1.20 years • 1.40 years • 1.60 years • 1.80 years

  10. Assume you are just starting an MBA program that will take two years to complete.  You read that an MBA will earn you about $10,000 per year (ordinary annuity) more than just an undergraduate degree.  Using a discount rate of 8.0%, what is the value today of the extra income if you decide to work 40 years after receiving your MBA? • $92,657 • $102,234 • $119,246 • $124,246

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