Question

2. If you invest $1,000 today at 10% annual interest and hold it for 40 years (until you’re in your 60s), how much will you have at the end of 40 years?

a. $1,000
b. more than $1,000 but less than $10,000
c. more than $40,000

16. The following should be EXCLUDED when calculating project cash flows
a. Financing Costs related to this specific project
b. Incremental after-tax cash flows from this specific project
c. Cannibalization of cash flows from other lines of business

17. Sunk Costs are
a. Project-related expense that doesn’t depend on whether the project is undertaken

b. Another term for Opportunity Costs
c. Project-related expenses once Accounts Payable are paid

31. If the US dollar / British pound exchange rate increased from 2 to 4

a. The US dollar depreciated relative to the British pound
b. The US dollar appreciated relative to the British pound
c. One US dollar is now worth 4 British pounds

The asset side of many companies’ balance sheet include both working capital and fixed capital. These assets are usually financed by

1. Equity capital

2. Vendor financing

3. Short-term and long-term debt respectively

Answer 1

Dear student, only one question is allowed at a time. I am answering the first question

2)

Assuming compound interest as interest is earned every year on closing balance of previous year

Future Value

= Present Value x [ ( 1 + Rate of Interest ) ^ Number of years ]

Where,

Present Value = $1,000

Rate of Interest = 10% or 0.10

Number of years = 40

So, Future Value

= $1,000 x [ 1.10 ^ 40 ]

= $1,000 x 45.25926

= $ 45,259.26

So, as we can find, the amount will be greater than $40,000 and so option c is the correct option