Finance

1. The future value of an annuity is typically used when analyzing

retirement plans.

alternative capital budgeting proposals.

the price of common stock.

loan amortization schedules.

2. Under which of the following discounting methods will the present value of an investment be the highest, assuming the same annual interest rate?

Yearly.

Continuous.

Quarterly.

Monthly.

3. What is the value of this 20 year lease? The first payment, due one year from today is $2,000 and each annual payment will increase by 4%. The discount rate used to evaluate similar leases is 9%. (Round to the nearest dollar.)

$ 39,856

$ 40,000

$ 68,000

$ 24,361

4. Time to attain goal: Elegant Designers have generated sales of $625,000 for the current year. If they can grow their sales at a rate of 12 percent every year, how long will they take to triple their sales? (Round off to the nearest year.)

9 years

10 years

8 years

7 years