Microsoft Word - Money, Banking, and Int Finance(scribd).docx

Money, Banking, and International Finance

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Key Terms

revenue
expense
balance sheet
asset
liability
equity
contributed capital
retained earnings
accounts receivable
accounts payable
current assets
fixed assets

statement of cash flows

Rule of 72

Annual Percentage Rate (APR)

compounding frequency

effective annual rate (EFF)

continuous compounding

annuity

ordinary annuity

annuity due

amortization table

net present value

Chapter Questions

1. Compute the net income if a company sold $50,000 of goods in cash, sold $60,000 of goods
   on accounts receivable, paid $100,000 in costs and operating expenses, paid taxes of
   $30,000, and paid $30,000 in administrative expenses.


2. Calculate the retained earnings of a corporation at the end of the year if retained earnings
   were $20,000 at the beginning of the year, net income was $50,000, declared $60,000 in
   dividends, and sold $50,000 in additional stock.


3. Compute a business’s cash balance at the end of the year if the company starts with a cash
   balance of $10,000, paid salaries of $70,000, received $100,000 in cash sales from
   customers and $30,000 for accounts receivable, and paid taxes of $10,000.


4. You will receive $1,000,000 in one hundred years exactly. How much is this worth to you
   today if the market interest rate equals 5% APR?


5. You deposit $5,000 into a bank that earns 10% APR. How much will your balance grow in
   50 years?


6. You deposit $1,000 in a bank for two years. Which interest rate in APR must you earn for
   your ending balance to be $1,200?


7. You deposit your savings into a money market that earns 3% APR. How many years would
   it double?