# Finance Topics

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Finance

Introduction to FinanceFind the time it takes for $9,100 to double when invested at an annual interest rate of 14%, compounded continuously.
______ years
Find the time it takes for $910,000 to double when invested at an annual interest rate of 14%, compounded continuously.
______ years

Finance

CapitalizationWhich of these are NOT sources of government revenue?
Corporate income taxes
Personal income taxes
Customs
Ticket sales to events

Finance

Introduction to FinanceWhat is one benefit of selecting an income-based repayment plan for your student loans?
If you take a job that pays a low income, you will never have to pay any of your student loans
Your student loan interest rate will fluctuate based on how much you've earned in the previous year
Your monthly loan payment will be based on your income, so that you're not paying more than 20% of income toward your loans
The total loan amount will be decreased to meet your starting salary at your first post-college job

Finance

GeneralWhat is the explicit reasoning in the following argument?
All of the employees will have a pay rise, because the company has earned twice the last year's profit.
The company has earned so much profit.
The employees will have a pay rise.
The employees earned twice the last year.
The company paid twice the profit.

Finance

Qualitative analysisThe Real Estate Division might order an independent audit of the broker's records by a CPA if the broker:
(a) is suspected of moral turpitude.
(b) Shows evidence of gross mismanagement.
(c) Doesn't have a branch manager.
(d) Isn't paying the sales agents the commissions stipulated in the employment agreement.

Finance

Preparation and Properties of CompoundsIf a salesperson placed an ad in the paper or put a sign on a property he had listed without giving the name of the brokerage he would have placed
(a) A legal and proper sign
(b) A sign by estoppel.
(c) A blind ad
(d) A deaf sign

Finance

Cost of CapitalCecilia owns her business and is considering an investment project, which requires an initial cost of $10,000. In addition, the project requires (additional) shutdown costs of $3000 four years from now.
benefit side is: the project will pay $5000 each year for the next three years.
What is the NPV of this investment project if the cost of capital is 7%?

Finance

Introduction to FinanceHow long does it take for an investment to double in value if it is invested at 17% compounded monthly? Or compounded continuously?

Finance

Cost of CapitalKeys Printing plans to issue a $1,000 par value, 20-year noncallable bond with a 7.00% annual coupon, paid semiannually. The company's marginal tax rate is 40.00%, but Congress is considering a change in the corporate tax rate to 45.00%. By how much would the component cost of debt used to calculate the WACC change if the new tax rate was adopted? Do not round your intermediate calculations.
a. -0.42%
b. -0.44%
c. -0.30%
d. -0.35%
e. -0.36%

Finance

Cost of CapitalYou were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 12.00%. The firm will not be issuing any new stock. What is its WACC?
a. 8.93%
b. 6.96%
c. 6.69%
d. 7.59%
e. 7.68%

Finance

Cost of CapitalCarlyle Inc. is considering two mutually exclusive projects. Both require an initial investment of $14,200 at t = 0. Project S has an life of 2 years with after-tax cash inflows of $7,400 and $13,600 at the end of Years 1 and 2, respectively. In addition, Project S repeated at the end of Year 2 with no changes in its cash flows. Project L has an expected life of 4 years with after-tax cash inflows $6,000 at the end of each of the next 4 years. Each project has a WACC of 9%. What is the equivalent annual annuity of the most profitable project? Do not round your intermediate calculations.
a. $1,358.20
b. $2,294.25
c. $1,616.90
d. $2,156.59
e. $2,454.85

Finance

Cost of CapitalBosio Inc.'s perpetual preferred stock sells for $85.00 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?
a. 8.75%
b.12.81%
c. 8.44%
d.10.42%
e. 1.35%

Finance

Introduction to FinanceIf a government increases its budget deficit, then interest rates
A. rise and the real exchange rate appreciates.
B. fall and the real exchange rate depreciates.
C. rise and the real exchange rate depreciates.
D. fall and the real exchange rate appreciates.

Finance

Introduction to FinanceWhen a tax is levied on the sellers of a good,
A. the supply curve shifts left (up) by less than the tax.
B. the supply curve shifts left (up) by more than the tax.
C. the supply curve shifts left (up) by an amount equal to the tax.
D. the supply curve does not shift when a tax is levied on sellers.

Finance

Introduction to FinanceFor a self-employed borrower, the underwriter must analyze the borrower's tax returns for the past
A) four years if the borrower's income is declining.
B) three years.
C) none of these; only a Dun & Bradstreet credit report on the business is needed.
D) two years, including a current P&L statement completed by an accountant.

Finance

Capital StructureA borrower's legal right to redeem a property after a tax foreclosure is the
A) right of title theory.
B) equitable right of redemption.
C) right of eminent domain.
D) statutory right of redemption.