Three years ago, Caroline invested $7,500. She has earned and will earn compound
interest of 3.2 percent per year. In one year from today, Mardy can make an
investment and earn simple interest of 13.2 percent per year. If Mardy wants to have
as much in 5 years from today as Caroline will have in 5 years from today, then how
much should Mardy invest in one year from today?
A) An amount equal to or greater than $6,400 but less than $7,100
B) An amount equal to or greater than $7,100 but less than $7,900
C) An amount equal to or greater than $7,900 but less than $8,600
D) An amount equal to or greater than $8,600 but less than $9,300
E) An amount less than $6,400 or an amount equal to or greater than $9,300 -
ANSWER>>E) An amount less than $6,400 or an amount equal to or greater than
$9,300
Two years ago, Rafer invested $1,600. He has earned and will earn compound interest
of 8.50 percent per year. If Lainie invests $1,700 in 1 year from today and earns simple
interest, then how much simple interest per year must Lainie earn to have the same
amount of money in 6 years from today as Rafer will have in 6 years from today?
Answer as an annual rate.
A) A rate less than 7.00 percent or an amount equal to or greater than 17.00 percent
B) A rate equal to or greater than 7.00 percent but less than 9.50 percent
C) A rate equal to or greater than 9.50 percent but less than 12.00 percent
D) A rate equal to or greater than 12.00 percent but less than 14.50 percent
,E) A rate equal to or greater than 14.50 percent but less than 17.00 percent -
ANSWER>>E) A rate equal to or greater than 14.50 percent but less than 17.00
percent
What is X if X equals the value of investment A plus the value of investment B?
Investment A is expected to pay $26,000 in 5 years from today and has an expected
return of 14.19 percent per year. Investment B is expected to pay $37,000 in 9 years
from today and has an expected return of 8.72 percent per year. - ANSWER>>$30,827
Danielle owns two investments, A and B, that have a combined total value of $25,000.
Investment A is expected to pay $24,800 in 4 years from today and has an expected
return of 12.79 percent per year. Investment B is expected to pay X in 7 years from
today and has an expected return of 8.22 percent per year. What is X, the cash flow
expected from investment B in 7 years from today? - ANSWER>>$16,821
Cowboy Frozen Custard is planning to sell its Dallas, Houston, and San Antonio stores
in S years from today. The firm expects to sell its Dallas store for a cash flow of $A, its
Houston store for a cash flow of $A, and its San Antonio store for a cash flow of $B.
The cost of capital for the Dallas store is Y percent, the cost of capital for the San
Antonio store is Y percent, the cost of capital for the Houston store is X percent, A > B
> 0, Y > X > 0, and S > 0. The cash flows from the sales are the only cash flows
associated with the various stores. Based on the information in the preceding
paragraph, which of the stores is most valuable?
A) The Dallas store is the most valuable of the 3 stores
B) The Houston store is the most valuable of the 3 stores
C) The San Antonio store is the most valuable of the 3 stores
D) Two of the three stores have equal value and those two stores are more valuable
than the third store - ANSWER>>B) The Houston store is the most valuable of the 3
stores
, Florida Fashion is planning to sell its Miami, Tampa, and Orlando stores. The firm
expects to sell each of the three stores for the same, positive cash flow of $A. The firm
expects to sell its Tampa store in S years, its Orlando store in S years, and its Miami
store in T years. The cost of capital for the Tampa store is Y percent, the cost of capital
for the Miami store is Y percent, the cost of capital for the Orlando store is X percent,
T > S > 0, and Y > X > 0. The cash flows from the sales are the only cash flows
associated with the various stores. Based on the information in the preceding
paragraph, which one of the following assertions is true?
A) The Tampa store is the most valuable of the 3 stores
B) The Miami store is the most valuable of the 3 stores
C) The Orlando store is the most valuable of the 3 stores
D) Two of the three stores have equal value and those two stores are more valuable
than the third st - ANSWER>>C) The Orlando store is the most valuable of the 3 stores
East Coast Athletics is planning to sell its Wilmington, Philadelphia, and Boston gyms.
The firm expects to sell its Wilmington gym for a cash flow of $A, its Philadelphia gym
for a cash flow of $A, and its Boston gym for a cash flow of $B. The firm expects to sell
its Wilmington gym in T years, its Philadelphia gym in S years, and its Boston gym in S
years. The cost of capital for all three gyms is Y, B > A > 0, T > S > 0, and Y > 0. The cash
flows from the sales are the only cash flows associated with the various gyms. Based
on the information in the preceding paragraph, which one of the following assertions
is true?
A) The Philadelphia gym is the most valuable of the 3 gyms
B) The Wilmington gym is the most valuable of the 3 gyms
C) The Boston gym is the most valuable of the 3 gyms
D) Two of the three gyms have equal value and those two gyms are more valuable
than the third gym or all three gyms have the same val - ANSWER>>C) The Boston gym
is the most valuable of the 3 gyms
