Answer: arithmetic Average Return =11.33%
Geometric Average Return=10.33%
Explanation:
Returns per year
Year 1 16%
year 2 23%
year 3 15
year 4 -11%
year 5 30 %
year 6 -5%
Total = 68%
Arithmetic Average = Total returns 0f ( year 1 -6) / number of years
= 68%/6 =11.33%
Geometric Average Return is given as
= ((1 + R1) × (1 + R2) × ... × (1 +Rn))(1/n) - 1
((1 + 16%) × (1 + (23%)) × (1 + 15%) x (1+ -11%) x (1+30%) x (1+ -5%))^1/6 - 1
((1.16 x 1.23 x 1.15 x 0.89 x 1.30 x (0.95)) ^1/6
((1.16 x 1.23 x 1.15 x 0.89 x 1.30 x 0.95)) ^1/6 -1
(1.8035073 )^1/6 - 1
= 1.10328 -1 = 0.10328 x 100 = 10.328% =10.33%
This Finance Test is designed to help you assess your knowledge on important finance concepts, terminology definitions, and frequently used calculations. We strongly encourage any students who are planning or are beginning their FMVA certification program to take this test to determine whether you will need to take the prerequisite finance courses including Reading Financial Statements, Introduction to Corporate Finance, and Math for Corporate Finance. This is also a useful resource for employers to examine the technical knowledge of the candidates during a finance interview.
If you pass this test with 80% or above (16 questions or more), it is likely that you have a strong background in finance and are good to go ahead with our core courses!

Finance Test Questions
1. The concept of present value relates to the idea that*
The discount rate is always higher when you invest now than in the future
The discount rate is always higher when you invest in the future than now
The money you have now is worth less today than an identical amount you would receive in the future
The money you have now is worth more today than an identical amount you would receive in the future
2. The formula for calculating future value (FV) is*
FV = PV/(1+r)^n
FV = PV/(1+r)*n
FV = PV x (1+r)^n
FV = PV x (1+r)*n
<span>the action of selling the same product at different prices to different buyers, in order to maximize sales and profits.
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Answer:
23.12%
Explanation:
Internal rate of return (IRR) is the rate at which the Net present value (NPV) of a project equals to zero.
Using a financial calculator and the CF function, input the following to find IRR;
Initial investment; CF0 = -1,200,000
Yr1 cashflow inflow ; C01 = 235,000
Yr2 cashflow inflow ; C02 = 412,300
Yr3 cashflow inflow ; C03 = 665,000
Yr4 cashflow inflow ; C04 = 875,000
Then key in IRR CPT = 23.119%
Therefore, the Internal rate of return this expansion is 23.12%
Answer:
The remaining useful life of the asset is = 10 - 3 = 7 years
Explanation:
The straight line method of depreciation charges a constant depreciation expense through out the useful life of the asset. The formula for depreciation expense under this method is,
Depreciation expense = (Cost - Salvage value) / Estimated useful life of the asset
Plugging in the values for depreciation expense per year, cost and salvage value, we can calculate the total expected life of the asset.
5000 = (53000 - 3000) / estimated useful life of the asset
estimated useful life of the asset = 50000 / 5000
estimated useful life of the asset = 10 years
As the accumulated depreciation balance is of 15000, the depreciation for 15000/5000 = 3years has been charged.
The remaining useful life of the asset is = 10 - 3 = 7 years
