You plan to buy a new Mercedes six years from now
You plan to buy a new Mercedes six years from now You plan to buy a new Mercedes six years from now. Today, a comparable car costs $60,000. You expectthe price of the car to increase by an average of 6 percent per year over the next six years. How muchwill your dream car cost by the time you are ready to buy it?$55,000$64,266$85,111$95,342$110,123None of the above.ABC Inc. entered into an agreement to purchase all of the outstanding shares of XYZ Corp. for $50 pershare. Immediately prior to the ABCâs bid, the shares of XYZ Corp. traded at $20 per share. The numberof outstanding shares at the time of the announcement was 50 million. The book value of interestbearing liabilities on the balance sheet of XYZ Corp. was $3 billion. What value did ABC Inc. place on thecontrol of XYZ Corp.?$1.5 billion$3.0 billion$4.5 billion$5.5 billionNone of the aboveGiven the debt/equity equals 1, what is the debt ratio and the equity multiplier.0.5; 21; 12; 0.52; 10.5; 0.5Martini Inc. is expanding, and as a result expects additional operating cash flows of $30,000 a year for 6years. This expansion requires $20,000 in new fixed assets. These assets will be worthless at the end ofthe project. In addition, the project requires an additional $4,000 of net working capital throughout thelife of the project; the firm expects to recover this amount at the end of the project. What is the netpresent value of this expansion project at a 10 percent required rate of return?$58,566$71,258$95,909$100,416$108,916None of the above.You are considering a new job offer which will pay you an annual salary of $41,000, $43,000, and$46,000 a year for the next three years, respectively. All salary payments are made as lump sumpayments at the end of each year. The offer also includes a starting bonus of $3,000 payableimmediately. What is this offer worth to you today at a discount rate of 6.75 percent?$100,015$113,955$116,955$129,145None of the aboveThe firm is working at 80 percent of fixed asset capacity. Its current sales is $600,000. Find the maximumrate (in percent) at which sales could grow before it has to buy any new fixed assets.15%25%30%35%None of the aboveAn investment costing $100,000 promises an after-tax cash flow of $20,000 per year for 5 years. Find theinvestment’s accounting rate of return?10%20%22%27%30%None of the above.Your grandmother invested a lump sum 30 years ago at 8 percent interest. Today, she gave you theproceeds of that investment which totaled $80,000. How much did she originally invest?$5,890$6,901$7,678$7,950$10,101None of the above.
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