Multiple choice
Thehonest1) The following investment is classified as?
NCash flow
0–$1,200
1$600
2$1,000
3–$450
a. Simple – 1 Actual ROR
b. Non-Simple – 1 Actual ROR
c. Simple – up to 2 Actual RORs
d. Non-Simple – up to 2 Actual RORs
2) A new product design is expected to require $10,000 in tooling which will be worth nothing in 5 years when the project ends. Assuming an interest rate of 10% annually and annual expenses of $3,000 to produce 3000 units per year. What is the average cost per unit?
$1.00
188
$2.39
$1.67
3) Using the rule of 72, how many years will it take to double your investment if the nominal interest rate is 12% compounded continuously?
a. 7.20 years
b. 5.65 years
c. 5.68 years
d. 6.00 years
4) What is the Present Cost of a 5 year service contract where you will pay $5000 initially, and this will decrease at a rate of $500/year starting in year one (i.e. your year 1 payment will be $4,500) and will end in year 5 (i.e. 6 total payments). (i=10% annually compounded)?
a.-$17,204
b.-$19,954
c.-$18,628
d.-$19,523
- 10 years ago
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