Exam Chapter 5-6
1. The major disadvantages of long-term debt include: (Points : 3.71) owners are able to maintain controlrelatively high, explicit after-tax costdecreased earnings per share through using financial leveragenone of the aboveall of the above
2. The ____ the investor's required rate of return on a bond, the ____ will be the value of the bond to the investor. (Points : 3.71) higher, lowerhigher, highernone of the above
3. George is 45 years old today and is beginning to plan for his retirement. He wants to set aside an equal amount at the end of each of the next 15 years so that he can retire at age 60. He expects to live to the maximum age of 85 and wants to be able to withdraw $35,000 per year from the account on his 61st through 85th birthdays. The account is expected to earn 9% per annum for the entire period of time. Determine the size of the annual deposits that must be made by George. (Points : 3.71)
$28,413.52$4,058.87$42,650.24$11,709.11$35,000
4. (Bonus Question) George is 45 years old today and is beginning to plan for his retirement. He wants to set aside an equal amount at the end of each of the next 15 years so that he can retire at age 60. He expects to live to the maximum age of 85 and wants to be able to withdraw $35,000 per year from the account on his 61st through 85th birthdays. If George expects to earn 4% per annum until he turns age 55, and 9% per annum thereafter. Determine the size of the annual deposits that must be made by George.(Points : 5)
$12,159.19$10,332.22$14,056.59$18,733.20
5. A U.S. Government bond was quoted at 98:01 "bid" and 98:10 "asked". How much would you have to pay for one of these $1,000.00 face value bonds?(Points : 3.71)
$983.13$983.75$985.00$986.25
6.
Marc Jacobs International LLC has issued preferred stock ($15 par value) that pays an annual dividend of $2.25. The preferred stock matures in 10 years. At that time, holders of the stock will receive, at their option, either $15 or one share of common
2. The ____ the investor's required rate of return on a bond, the ____ will be the value of the bond to the investor. (Points : 3.71) higher, lowerhigher, highernone of the above
3. George is 45 years old today and is beginning to plan for his retirement. He wants to set aside an equal amount at the end of each of the next 15 years so that he can retire at age 60. He expects to live to the maximum age of 85 and wants to be able to withdraw $35,000 per year from the account on his 61st through 85th birthdays. The account is expected to earn 9% per annum for the entire period of time. Determine the size of the annual deposits that must be made by George. (Points : 3.71)
$28,413.52$4,058.87$42,650.24$11,709.11$35,000
4. (Bonus Question) George is 45 years old today and is beginning to plan for his retirement. He wants to set aside an equal amount at the end of each of the next 15 years so that he can retire at age 60. He expects to live to the maximum age of 85 and wants to be able to withdraw $35,000 per year from the account on his 61st through 85th birthdays. If George expects to earn 4% per annum until he turns age 55, and 9% per annum thereafter. Determine the size of the annual deposits that must be made by George.(Points : 5)
$12,159.19$10,332.22$14,056.59$18,733.20
5. A U.S. Government bond was quoted at 98:01 "bid" and 98:10 "asked". How much would you have to pay for one of these $1,000.00 face value bonds?(Points : 3.71)
$983.13$983.75$985.00$986.25
6.
Marc Jacobs International LLC has issued preferred stock ($15 par value) that pays an annual dividend of $2.25. The preferred stock matures in 10 years. At that time, holders of the stock will receive, at their option, either $15 or one share of common