Question

You borrow $75,000 and promise to pay back $162,892 at the end of 11 years. What is the annual interest rate? Select one:

a. 10%

b. 8%

c. 12%

IBM Inc. has long term debts of $500,000, current liabilities $250,000 and total assets of $1,200,000. Then, the company total owners’ equity equals:
Select one:
a. $250,000
b. $700,000
c. $500,000
d. $450,000

If the company assets are $200 million, debts $100 million, and net income is $15 million, it is ROE is:
Select one:
a. 15%
b. 20%
c. 10%
d. 12%
You got a loan today of $10,000 for 3 years, annual interest rate is 6%. The annual payment is closest to:
Select one:
a. $2,674
b. $4,020
c. $2,890
d. $3,741

Answer 1

Q1) B) 8%

Explanation:

Using financial calculator to calculate the rate of interest

Inputs: N= 11

   Pv= -75,000

Fv= 162,892

Pmt= 0

I/y= compute

We get, rate of return as 7.31%

As there is no option with 7%, We will choose the closest option which is 8% .

Q2) D) $450,000

Explanation: Equity= Asset - debt - current liabilities

= 1,200,000 - 500,000 + 250,000

= 1,200,000 - 750,000

= 450,000

Q3) a) 15%

Explanation:

Roe = net profit / Asset - debt

= 15 / 200 - 100

= 15 / 100

= 15%

Q4) D) $3,741

Explanation:

Using financial calculator to calculate the payment per year

Inputs: N= 3

I/y= 6%

Pv= -10,000

Fv= 0

Pmt= compute

We get, payment per year as $3,741