Test Bank For Principles of Corporate Finance 14e Richard Brealey Stewart Myers Franklin Allen Alex Edmans (Complete And Verified Study material) (709pages) LEARNEXAMS

Chapter 1 1) Mr. Free has $80 in income this year and will have zero income next year. The market interest rate is 10 percent per year. If Mr. Free consumes $20 this year and invests the rest in the market, what will be available for his consumption next year? A) $39 B) $44 C) $66 D) $89 2) Mr. Bird has $120 in income this year and will have zero income next year. The market interest rate is 10 percent per year. Mr. Bird also has an investment opportunity in which he can invest $60 today and receive $102 next year. Suppose Mr. Bird consumes $30 this year and invests in the project. How much will be available for his consumption next year? A) $113 B) $115 C) $133 D) $135 3) Ms. Venus has $120 in income this year and will have $150 next year. The market interest rate is 10 percent per year. Suppose Ms. Venus consumes $60 this year. How much will be available for her consumption next year? A) $182 B) $216 C) $232 D) $272 4) Mr. Thomas has $120 in income this year and will have zero income next year. The market interest rate is 10 percent per year. Mr. Thomas also has an investment opportunity in which he can invest $60 this year and receive $58 next year. Suppose Mr. Thomas consumes $50 this year and invests in the project. What will be his consumption next year? A) $39 B) $44