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# FIN 515 Week 4 Midterm Exam (Version 2)

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(TCO A) Which of the following statements is CORRECT? (Points : 10)

(TCO G) Which of the following statements is CORRECT? (Points : 10)

(TCO G) LeCompte Corp. has \$312,900 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were \$620,000, and its net income after taxes was \$24,655. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15%. What profit margin would LeCompte need in order to achieve the 15% ROE, holding everything else constant? (Points : 10)

(TCO B) You want to buy a new sports car three years from now, and you plan to save \$4,200 per year, beginning one year from today. You will deposit your savings in an account that pays 5.2% interest. How much will you have just after you make the third deposit, three years from now? (Points : 10)

(TCO B) You sold a car and accepted a note with the following cash flow stream as your payment. What was the effective price you received for the car assuming an interest rate of 6.0%?

Years:    0          1             2             3             4

|-----------|--------------|--------------|--------------|

CFs:     \$0     \$1,000     \$2,000     \$2,000     \$2,000 (Points : 10)

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