Best available alternative investment of equal risk

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Reference no: EM131525080

1. Which of the following is an example of a firm's long-term debt?

a Retained earnings

b Accounts receivable

c Corporate bonds

d Accounts payable

2. Ibiza Corporation has been investing $20,000 for the last four years in an investment scheme that is maturing at the end of the current year. It will be receiving $120,000 at the time of maturity. The $120,000 received at maturity is referred to as _____.

a ordinary annuity

b deferred annuity

c uneven cash flow

d lump-sum amount

3. An annuity with payments that occur at the beginning of each period is known as a _____.

a deferred annuity

b immediate annuity

c ordinary annuity

d annuity due

4. Jason's opportunity cost rate is 8 percent compounded annually. How much must he deposit in an account today if he wants to receive $5,400 at the end of each of the next 10 years? Nper = 10, Rate= 8, FV = 0, PMT = –5,400

a $34,852

b $40,252

c $36,234

5. Which of the following is defined as the rate of return on the best available alternative investment of equal risk?

a Amortization rate

b Opportunity cost rate

c Expected rate of return

d Risk adjusted rate

Ten years ago, Emma purchased an investment for $22,500. The investment earned 7 percent interest each year. What is the worth of the investment today?

a $46,458

b $44,325

c $40,527

d $36,667

Reference no: EM131525080

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