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1. Last year Ellis Inc.'s earnings per share were...




1. Last year Ellis Inc.'s earnings per share were $3.50, and its growth rate during the prior 5 years was 9.0% per year. If that growth rate were maintained, how many years would it take for Ellis? EPS to triple? (Points : 2) 9.29 10.33 11.47 12.75 Question 2. 2. How much would $5,000 due in 25 years be worth today if the discount rate were 5.5%? (Points : 2) $1,067.95 $1,124.16 $1,183.33 $1,311.17 Question 3. 3. Jose now has $500. How much would he have after 6 years if he leaves it invested at 5.5% with annual compounding? (Points : 2) $591.09 $622.20 $654.95 $689.42 Question 4. 4. Suppose you have $1,500 and plan to purchase a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually. How much will you have when the CD matures? (Points : 2) $1,781.53 $1,870.61 $1,964.14 $2,062.34 Question 5. 5. Ellen now has $125. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding? (Points : 2) $205.83 $216.67 $228.07 $240.08 $252.08 Question 6. 6. Suppose a U.S. treasury bond will pay $2,500 five years from now. If the going interest rate on 5-year treasury bonds is 4.25%, how much is the bond worth today? (Points : 2) $1,928.78 $2,030.30 $2,131.81 $2,238.40 Question 7. 7. Which of the following could explain why a business might choose to operate as a corporation rather than as a sole proprietorship or a partnership? (Points : 2) Corporations generally find it relatively difficult to raise large amounts of capital. Less of a corporation?s income is generally subjected to taxes than would be true if the firm were a partnership. Corporate shareholders escape liability for the firm's debts, but this factor may be offset by the tax disadvantages of the corporate form of organization. Corporate investors are exposed to unlimited liability. Question 8. 8. Money markets are markets for (Points : 2) Foreign stocks. Consumer automobile loans. U.S. stocks. Short-term debt securities. Question 9. 9. Which of the following statements regarding a 15-year (180-month) $125,000, fixed-rate mortgage is CORRECT? (Ignore taxes and transactions costs.) (Points : 2) The remaining balance after three years will be $125,000 less one third of the interest paid during the first three years. Because it is a fixed-rate mortgage, the monthly loan payments (which include both interest and principal payments) are constant. Interest payments on the mortgage will increase steadily over time, but the total amount of each payment will remain constant. The proportion of the monthly payment that goes towards repayment of principal will be lower 10 years from now than it will be the first year. The outstanding balance declines at a slower rate in the later years of the loan?s life. Question 10. 10. The disadvantages associated with a proprietorship are similar to those under a partnership. One exception relates to the more formal nature of the partnership agreement and the commitment of all partners' personal assets. As a result, partnerships do not have difficulty raising large amounts of capital. (Points : 2) True False


Paper#5445 | Written in 18-Jul-2015

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