Roger Clemens Used Steroids

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Agre

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Neu

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0% 0% 0%0%0%

1. Strongly Agree

2. Agree

3. Neutral

4. Disagree

5. Strongly Disagree

You bought a lot in a subdivision for $15,000 that you plan to sell in 15 years.  You expect an annual growth rate of 5 percent.  What is the expected value of the lot in the 15th year?

$31,083.92 $31,183.92 $32,083.92 $32,183.92

25% 25%25%25%

1 2 3

1. $31,083.92

2. $31,183.92

3. $32,083.92

4. $32,183.92

You can invest $1,000 for ten years at the rate of 10% annually. How much will you have in 10

years?

$10,000.23 $15.465.43 $15,937.43 $17,921.22

0% 0%0%0%

1. $10,000.23

2. $15.465.43

3. $15,937.43

4. $17,921.22

1 2 3

You would like to open a sports store.  You are considering a franchise or your own, independent store.  If you decide to own a store under the franchise system (e.g., Play it Again Sports), you will generate $5,000 a year more (end-of-year) for 15 years.  The initial cost will be $60,000 more versus having your own, independent store.  If you would like a 7% annual return, should you start a store under a franchise system or be independent?

0% 0%0%0%

1. Franchise, 8.65% annual return

2. Franchise, 9.53%

3. Independent, 2.93%

4. Independent, 3.12%

1 2 3

You would like to open a sports store.  You are considering a franchise or your own, independent store.  If you decide to own a store under the franchise system (e.g., Play it Again Sports), you will generate $5,000 a year more (end-of-year) for 15 years.  The initial cost will be $60,000 more versus having your own, independent store.  If you would like a 7% annual return, should you start a store under a franchise system or be independent?

Franchise,PV Benefit$65,539.57

Franchise,$55,539.57

Independent, $5,539.57

Independent, $45,539.57

0% 0%0%0%

1. Franchise, PV Benefit $65,539.57

2. Franchise, $55,539.57

3. Independent, $5,539.57

4. Independent, $45,539.57

1 2 3

You tell your sister, “If you move out today, I will buy you a car valued at $10,000 when you turn 18."  Your sister is 16 years old.  If you receive a 10% annual return, how much money do you have to set aside today to be able to buy your sister a car when she is 18?

$8,264.46 $9,264.46.43 $7,264.46 $11,264.46

0% 0%0%0%0

3

1. $8,264.46

2. $9,264.46.43

3. $7,264.46

4. $11,264.46

1 2 3

You are using outdated equipment in the plant that costs $12,000 per machine per year to maintain.  You could buy new equipment at $30,000 per machine.  The new machines would cost $5,000 per year to maintain.  If both old and new machines have a remaining life of 10 years, should you replace the machines?  You would like a 9% annual return. 

Yes, pvbenefit

$54,923,60

No,$24,923.60

No,$34,923.60

Yes,$44,923.60

0% 0%0%0%

1. Yes, pv benefit $54,923,60

2. No, $24,923.60

3. No, $34,923.60

4. Yes, $44,923.60

1 2 3

You are using outdated equipment in the plant that costs $12,000 per machine per year to maintain.  You could buy new equipment at $30,000 per machine.  The new machines would cost $5,000 per year to maintain.  If both old and new machines have a remaining life of 10 years, should you replace the machines?  You would like a 9% annual return. 

0% 0%0%0%

0

3

1. Yes, 19.36%

2. No, 9.36%

3. Yes, 17.36%

4. No, 7.36%

1 2 3

Your rich aunt will be giving you $336,740.  Unfortunately, she thinks that you are not mature enough to receive the money today, so the $336,740 will be given to you in eight years.  Assume a 9% discount rate.  What is the value of the gift today?

$158,998.45 $168,998.45 $178,998.45 $188,998.45

0% 0%0%0%

1. $158,998.45

2. $168,998.45

3. $178,998.45

4. $188,998.45

1 2 3

Your property taxes have just increased by $800 per year (payable at the end of the year).  You make it a point to have the present value of the property taxes for the next three years set aside in an account.  The account returns 5% annually.  How much should be added to the account to assure that the property taxes for the next three years are paid?

$2,178.60 $2,278.60 $2,378.60 $2,478.60

0% 0%0%0%0

3

1. $2,178.60

2. $2,278.60

3. $2,378.60

4. $2,478.60

1 2 3

Seven years ago you bought shares of Cisco Systems for $12.00 per share today you sold the shares for $36.00.  What was your annual rate of return (assume no dividends, no commissions)?

0% 0%0%0%

1. 14.99%

2. 15.99%

3. 16.99%

4. 18.00%

1 2 3

Fourteen years ago, you bought a Barry Bonds baseball card for 40 cents.  You expect to sell the card next year for $1,000.  What would be your annual rate of return? 

0% 0%0%0%

1. 58.47%

2. 63.47%

3. 68.47%

4. 73.47%

1 2 3

The past five years you have been managing the family fortune that was left to you by your grandparents-- value $10,000,000 (10 years ago).  Unfortunately, the assets have been decreasing at a rate of 6% per year.  You promised your family that you would let someone else manage the assets if the investments ever fell to one-half the original value.  If you keep losing money at 6% per year, how many years do you have left before you give up your money management position? 

0% 0%0%0%

1. 1.20 years

2. 1.40 years

3. 1.60 years

4. 1.80 years

1 2 3

Assume you are just starting an MBA program that will take two years to complete.  You read that an MBA will earn you about $10,000 per year (ordinary annuity) more than just an undergraduate degree.  Using a discount rate of 8.0%, what is the value today of the extra income if you decide to work 40 years after receiving your MBA?

$92,657 $102,234 $119,246 $124,246

0% 0%0%0%

1. $92,657

2. $102,234

3. $119,246

4. $124,246

1 2 3