# Financial Pre-Test Problems

I am looking for the way to solve these by hand and in Excel, and also the proper answer:

1. Suppose that the following cash flows are received:

0 = -$500, 1 = $200, 2 = $200, 3 = $200

The Internal Rate of Return on the cash flows (rounded to the nearest percent) is

8%, 9%, 10%, 11%, or 12%

2. A 10-year bond paying 8% annual coupons pays $1000 at maturity. If the required rate of return on the bond is 7%, then today the bond will sell (rounded to the nearest cent) for

$1000.00

$1210.45

$987.48

$1070.24

3. The annual revenue-growth rates for a new tech star tup during its first 4 years of operations were as follows:

1 = 50, 2 = 50, 3 = -50, 4 = -50

Rounded to the nearest tenth of one percent, the start up's 4-year Compound Annual Growth Rate was

-13.4% or -10.5%

4. Last year, a barber shop generated $100,000 in profit. Assume that the shop's profits grow at 5% per year and that cash flows are discounted at 10% per year. If profits are received at the end of each year, what is the present value of all the shop's future profits?

$2,100,000

$3,000,000

https://brainmass.com/business/finance/financial-pre-test-problems-552044

#### Solution Preview

See the attached file for proper formatting. Thanks

I am looking for the way to solve these by hand and in Excel, and also the proper answer:

1. Suppose that the following cash flows are received:

0 = -$500, 1 = $200, 2 = $200, 3 = $200

The Internal Rate of Return on the cash flows (rounded to the nearest percent) is

8%, 9%, 10%, 11%, or 12%

Solution

Year Cash Flow

0 ($500)

1 $200

2 $200

3 $200 ...

#### Solution Summary

Financial pre test problems for cash flows received are given.