To compute the present or future value of an annuity due, one computes the value of an ordinary annuity

and then:

What is the present value, when interest rates are 6.5 percent, of a $100 payment made every year

forever?

Which of the following refers to the amount of debt versus equity a firm has on its balance sheet?

What is the present value of a $200 payment made in 3 years when the discount rate is 8 percent?

Asset Management Ratios Corn Products, Corp. ended the year 2008 with an average collection period

of 41 days. The firm’s credit sales for 2008 were $9.1 million. What is the year-end 2008 balance in

accounts receivable for Corn Products? (Consider a 365 days a year.)

People borrow money because they expect:

What is the future value of $700 deposited for one year earning 4 percent interest rate annually?

What is the present value of a $7,000 payment made in six years when the discount rate is 4 percent?

Which of these can be used by interested parties to identify changes in corporate performance?

Which of these ratios measure the extent to which the firm uses debt (or financial leverage) versus equity

to finance its assets?

You are considering a stock investment in one of two firms (A and B), both of which operate in the same

industry. A finances its $20 million in assets with $18 million in debt and $2 million in equity. B finances its

$20 million in assets with $2 million in debt and $18 million in equity. Calculate the equity multiplier for the

two firms.

Which of the following refer to ratios that measure the relationship between a firm’s liquid (or current)

assets and its current liabilities?

Which ratio measures the number of dollars of sales produced per dollar of inventory?

Which of the following is NOT true when developing a time line?

If you start making $115 monthly contributions today and continue them for six years, what is their

present value if the compounding rate is 12 percent APR? What is the present value of this annuity?

With regard to money deposited in a bank, future values are: