Version A

COMM-121 and COMM-221 Introduction to Finance Quiz, Fall 2011

VERSION A
Instructions:          You have 75 minutes to complete the quiz The quiz is 9 pages with printing on both sides Answer each question in the space provided on the question sheet For multiple choice questions, CLEARLY circle one (and only one) answer You may use a calculator that complies with the blue sticker policy A formula sheet is provided at the end of the quiz Clearly state any assumptions that you believe are necessary to answer a question For questions 2 and 3, answers given without supporting work will receive no credit Good luck!! 

EVALUATION Question 1 Question 2 Question 3 TOTAL /30 /10 /10 /50

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Version A Question 1: Multiple Choice (30 points) CLEARLY circle the most appropriate answer to each question below. 1) First Simple Bank pays 5% simple interest on savings account balances. First Complex Bank pays 5% interest with annual compounding. If you deposit $5,000 today at each bank, in 10 years you will have balances of $__________ at First Complex Bank and $___________ at First Simple Bank. a. 8,144.47 and 7,500.00 ** b. 8,150.00 and 7,144.47 c. 8,500.00 and 7,244.57 d. 8,544.47 and 7,700.00 2) You invest $1,234.56 at 5% compounded annually. How many years will it take to triple your money? a. 18.85 b. 22.52 ** c. 14.21 d. 28.41 3) You want to buy a new car but you will need to obtain a bank loan to do so. You can afford up to $400 per month in loan repayments. Your bank will lend you money at a stated rate of 9% with monthly compounding. If you can make monthly payments at the end of each month for five years, what is the most expensive car you can afford to buy? a. $19,269.34 ** b. $23,436.91 c. $24,086.69 d. $19,413.87 4) Agency costs refer to: a. The costs incurred by managers in their role as agents of shareholders. b. The costs incurred by