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 Chapter 7
Student: ___________________________________________________________________________

1. A $25 investment produces $27.50 at the end of the year with no risk. Which of the following is
not true?

A. NPV is positive if the interest rate is less than 10%.

B. NPV is negative if the interest rate is less than 10%.
C. NPV is zero if the interest rate is equal to 10%.

2. Accepting positive NPV projects benefits the stockholders because:

A. it most easily understood valuation process.

B. the value of the expected cashflows are equal to the cost.
C. the value of the expected cashflows are greater than the cost.
D. it is the most easily calculated.

3. Which of the following does not characterize NPV?

A. NPV is the simplest of all investment rules.

B. NPV incorporates all relevant information.
C. NPV uses all of the project's cash flows.
D. NPV discounts all future cash flows.

4. If a project is assigned a required rate of return equal to zero, then:

A. the timing of the project's cash flows has no bearing on the value of the project.
B. the project will always be accepted.
C. the project will always be rejected.
D. whether the project is accepted or rejected will depend on the timing of the cash flows.

5. Payback is frequently used to analyze independent projects because:

A. it considers the time value of money.

B. all relevant cash flows are included in the analysis.
C. it is easy and quick to calculate.
D. it is the most desirable of all the available analytical methods from a financial perspective.
6. The payback period rule accepts all investment projects in which the payback period for the cash
flows is:

A. greater than or equal to the cut-off point.

B. greater than the cut-off point.
C. less than the cut-off point.
D. positive.

7. Consider an investment with an initial cost of $20,000 and is expected to last for 5 years. The
expected cash flow in years 1 and 2 are $5000, in years 3 and 4 are $5,500 and in year 5 is
$1,000. The total cash inflow is expected to be $22,000 or an average of $4,400 per year.
Compute the payback period in years.

A. 3.18
B. 3.82
C. 4.55
D. 4.00

8. An investment project is most likely to be accepted by the payback period rule and not accepted
by the NPV rule if the project has:

A. a large initial investment with moderate positive cash flows over a very long period of time.
B. a very large negative cash flow at the termination of the project.
C. most of the cash flow at the beginning of the project.
D. All projects approved by the payback period rule will be accepted by the NPV rule.
E. The payback period rule and the NPV rule cannot be used to evaluate the same type of
projects.

9. The discounted payback rule states that you should accept projects:

A. which have a discounted payback period that is greater than some pre-specified period of time.
B. if the discounted payback is positive and rejected if it is negative.
C. only if the discounted payback period equals some pre-specified period of time.
D. if the discounted payback period is less than some pre-specified period of time.
10. An investment with an initial cost of $16,000 produces cash flows of $5000 annually. If the cash
flow is evenly spread out over the year and the firm can borrow at 10%, the discounted payback
period is _____ years.

A. 4.55
B. 4.05
C. 3.20
D. 3.52

11. An investment project has the cashflow stream of -250, 75, 125, 100, and 50. The cost of capital
is 12%. What is the discount payback period?

A. 2.5 years.
B. 2.7 years.
C. 3.38 years.
D. 1.40 years.
E. 1.25 years.

12. The discounted payback period rule:

A. considers the time value of money.

B. discounts the cutoff point.
C. ignores uncertain cash flows.
D. is preferred to the NPV rule.

13. The payback period rule:

A. determines a cutoff point so that all projects accepted by the NPV rule will be accepted by the
payback period rule.
B. determines a cutoff point so that depreciation is just equal to positive cash flows in the payback
year.
C. requires an arbitrary choice of a cut-off point.
D. varies the cut-off point with the interest rate.
14. Which one of the following statements is correct concerning the payback period?

A. An investment is acceptable if its calculated payback period is less than some pre-specified
period of time.
B. An investment should be accepted if the payback is positive and rejected if it is negative.
C. An investment should be rejected if the payback is positive and accepted if it is negative.
D. An investment is acceptable if its calculated payback period is greater than some pre-specified
period of time.
E. An investment should be accepted any time the payback period is less than the discounted
payback period, given a positive discount rate.

15. It will cost $3,000 to acquire a small ice cream cart. Cart sales are expected to be $1,400 a year
for three years. After the three years, the cart is expected to be worthless as that is the expected
remaining life of the cooling system. What is the payback period of the ice cream cart?

A. 0.83 years.
B. 1.14 years.
C. 1.83 years.
D. 2.14 years.
E. 2.83 years.

16. A project has an initial cost of $8,600 and produces cash inflows of $3,200, $4,900, and $1,500
over the next three years, respectively. What is the discounted payback period if the required rate
of return is 8%?

A. 2.05 years
B. 2.13 years
C. 2.33 years
D. 3.00 years
E. never

17. Ginny is considering an investment which will cost her $120,000. The investment produces no
cash flows for the first year. In the second year the cash inflow is $35,000. This inflow will
increase to $55,000 and then $75,000 for the following two years before ceasing permanently.
Ginny requires a 10% rate of return and has a required discounted payback period of three years.
Ginny should _______ this project because the discounted payback period is ______.

A. accept; 2.03 years

B. accept; 2.97 years
C. accept; 3.97 years
D. reject; 3.03 years
E. reject; 3.97 years
18. The average accounting rate of return is determined by:

A. dividing the yearly cashflows by the investment.

B. dividing the average cashflows by the investment.
C. dividing the average net income by the average investment.
D. dividing the average net income by the initial investment.
E. dividing the net income by the cashflow.

19. The investment decision rule that relates average net income to average investment is the:

A. discounted cash flow rule.

B. average accounting rate of return method.
C. average payback rule.
D. average profitability index.

20. An investment that requires initial cash outlay of $100,000 has a useful life of 3 years. In each of
these years the before-tax cash flow is $40,000. If the tax rate is 34% and straight-line
depreciation is used, the average accounting return is:

A. 40.00%.
B. 26.40%.
C. 13.34%.
D. 8.80%.

21. The internal rate of return for a project will increase if:

A. the initial cost of the project can be reduced.

B. the total amount of the cash inflows is reduced.
C. each cash inflow is moved such that it occurs one year later than originally projected.
D. the required rate of return is reduced.

22. The internal rate of return tends to be:

A. easier for managers to comprehend than the net present value.

B. extremely accurate even when cash flow estimates are faulty.
C. ignored by most financial analysts.
D. used primarily to differentiate between mutually exclusive projects.
23. The two fatal flaws of the internal rate of return rule are:

A. arbitrary determination of a discount rate and failure to consider initial expenditures.

B. arbitrary determination of a discount rate and failure to correctly analyze mutually exclusive
investment projects.
C. arbitrary determination of a discount rate and the multiple rate of return problem.
D. failure to consider initial expenditures and failure to correctly analyze mutually exclusive
investment projects.
E. failure to correctly analyze mutually exclusive investment projects and the multiple rate of
return problem.

24. A mutually exclusive project is a project whose:

A. acceptance or rejection has no effect on other projects.

B. NPV is always negative.
C. IRR is always negative.
D. acceptance or rejection effects other projects.

25. A project will have more than one IRR if:

A. the IRR is positive.

B. the IRR is negative.
C. the NPV is zero.
D. the cash flow pattern exhibits more than one sign change.
E. the cash flow pattern exhibits exactly one sign change.

26. Using the internal rate of return rule, a conventional project should be accepted if the internal rate
of return is:

A. only equal to the current weighted average cost of capital.

B. greater than the current weighted average cost of capital.
C. less than the current weighted average cost of capital.
D. negative.
E. positive.

27. The internal rate of return may be defined as:

A. the discount rate that makes the NPV cash flows equal to zero.
B. the difference between the market rate of interest and the NPV.
C. the market rate of interest less the risk-free rate.
D. the project acceptance rate set by management.
28. The Balistan Rug Company is considering investing in a new loom that will cost $12,000. The
new loom will create positive end of year cash flow of $5,000 for the next 3 years. The internal
rate of return for this project is:

A. between 10% and 15%.

B. between 15% and 20%.
C. between 20% and 25%.
D. between 25% and 30%.
E. less than 10%.

29. The Carnation Chemical Company is investing in an incinerator to dispose of PCB waste. The
incinerator costs $1.5 million and will generate end of year cash of $1 million for the next 3 years.
At the end of 3 years the incinerator will be worthless and must be disposed of at the cost of
$500,000. The internal rate of return for this project is:

A. between 10% and 20%.

B. between 20% and 30%.
C. between 30% and 40%.
D. more than 40%.

30. The IRR decision rule can be reversed because:

A. the NPV rule is not the same as the IRR.

B. the IRR is based on a mutually exclusive investment.
C. instead of an investment project it is a financing project.
D. the IRR is greater than 100%.

31. Which of the following correctly orders the investment rules of average accounting return (AAR),
internal rate of return (IRR), and net present value (NPV) from the most desirable to the least
desirable?

A. AAR, IRR, NPV.

B. AAR, NPV, IRR.
C. IRR, AAR, NPV.
D. NPV, AAR, IRR.
E. NPV, IRR, AAR.
32. A project will have only one internal rate of return if:

A. all cash flows after the initial expense are positive.

B. average accounting return is positive.
C. net present value is negative.
D. net present value is positive.
E. net present value is zero.

33. You have a choice between two projects, Project1 pays $12,000 back at the end of 1 period on
an investment of $10,000. Project 2 pays back $6,500 at the end of 1 period on an investment of
$5,000. Which project should be chosen and what is the problem that you must be concerned
with in this choice?

A. Project 1; discount rate.

B. Project 2; discount rate.
C. Project 1; project scales.
D. Project 2; project scales.
E. Project 1, cash flow timings.

34. The problem of multiple IRRs can occur when:

A. there is only one sign change in the cash flows.

B. the first cash flow is always positive.
C. the cash flows decline over the life of the project.
D. there is more than one sign change in the cash flows.

35. The elements that cause problems with the use of the IRR in projects that are mutually exclusive
are:

A. the discount rate and scale problems.

B. timing and scale problems.
C. the discount rate and timing problems.
D. scale and reversing flow problems.
E. timing and reversing flow problems.
36. You are trying to determine whether to accept project A or project B. These projects are mutually
exclusive. As part of your analysis, you should compute the incremental IRR by determining:

A. the internal rate of return for the cash flows of each project.
B. the net present value of each project using the internal rate of return as the discount rate.
C. the discount rate that equates the discounted payback periods for each project.
D. the discount rate that makes the net present value of each project equal to 1.
E. the internal rate of return for the differences in the cash flows of the two projects.

37. If there is a conflict between mutually exclusive projects due to the IRR, one should:

A. drop the two projects immediately.

B. spend more money on gathering information.
C. depend on the NPV as it will always provide the most value.
D. depend on the AAR because it does not suffer from these same problems.

38. The profitability index is the ratio of:

A. average net income to average investment.

B. internal rate of return to current market interest rate.
C. net present value of cash flows to internal rate of return.
D. net present value of cash flows to average accounting return.
E. present value of cash flows to initial investment cost.

39. Under capital rationing the profitability index is used to select investments because of limited
capital by their:

A. excess profit to achieve the highest payoff.

B. reward per dollar cost to achieve the highest incremental NPV.
C. incremental IRR to maximize the total rate of return.
D. capital usage rate to stay within budget.
40. You are considering a project with the following data:

Internal rate of return 8.7%

Profitability ratio .98
Net present value -$393
Payback period 2.44 years
Required return 9.5%

Which one of the following is correct given this information?

A. The discount rate used in computing the net present value must have been less than 8.7%.
B. The discounted payback period will have to be less than 2.44 years.
C. The discount rate used to compute the profitability ratio was equal to the internal rate of return.
D. This project should be accepted based on the profitability ratio.
E. This project should be rejected based on the internal rate of return.

41. Suppose that a project has a cash flow pattern (-$2,000, $25,000, -$25000) Its IRR is given by:

A. 12.20%
B. 9.61% or 1040.39%
C. 25.25% or 250.52%
D. 4100.11%

42. Suppose that a project has a cash flow pattern (-$2,000, $25,000,- $25000). For its modified IRR
at a discount rate of 10%, the relevant numbers are:

A. (-$2,000, $25,000)
B. (-$2,000, $2,129)
C. (-$5,000, $5,000)
D. (-$2,000, $2,273)

43. Suppose that a project has a cash flow pattern (-$2,000, $25,000, -$25000) and discount rate of
10%, its modified IRR is given by:

A. 12.65%
B. 25.22% or 400%
C. 25.22% or 250%
D. 13.64%
44. Explain the differences and similarities between net present value (NPV) and the profitability
index (PI).

45. The Ziggy Trim and Cut Company can purchase equipment on sale for $4,300. The asset has a
three-year life, will produce a cash flow of $1,200 in the first and second year, and $3,000 in the
third year. The interest rate is 12%. Calculate the project's payback assuming end of year cash
flows. Also, calculate project's IRR. Should the project be taken? Check your answer by
computing the project's NPV.

46. The Ziggy Trim and Cut Company can purchase equipment on sale for $4,300. The asset has a
three-year life, will produce a cashflow of $1,200 in the first and second year, and $3,000 in the
third year. The interest rate is 12%. Calculate the project's discounted payback and Profitability
Index assuming end of year cash flows. Should the project be taken? If the accounting rate of
return was positive, how would this affect your decision?
47. The Walker Landscaping Company can purchase a piece of equipment for $3,600. The asset has
a two-year life, will produce a cashflow of $600 in the first year and $4200 in the second year. The
interest rate is 15%. Calculate the project's payback assuming steady cashflows. Also calculate
the project's IRR. Should the project be taken? Check your answer by computing the project's
NPV.

48. The Walker Landscaping Company can purchase a piece of equipment for $3,600. The asset has
a two-year life, will produce a cashflow of $600 in the first year and $4200 in the second year. The
interest rate is 15%. Calculate the project's discounted payback and Profitability Index assuming
steady cashflows. Should the project be taken? If the accounting rate of return was positive, how
would this affect your decision?

49. Cutler Compacts will generate cash flows of $30,000 in year one, and $65,000 in year two.
However, if they make an immediate investment of $20,000, they can expect to have cash
streams of $55,000 in year 1 and $63,000 in year 2 instead. The interest rate is 9%. Calculate the
NPV of the proposed project. Why would the IRR be a poor choice in this situation?
50. Given the cash flow stream of the following mutually exclusive projects, prove through the
incremental investment that Project B, with the higher NPV, will be preferred to project A.

51. The IRR rule is said to be a special case of the NPV rule. Explain why this is so and why it has
some limitations NPV does not?

52. The NPV rule and PI give the same results when there is no conflict. In the case of a mutually
exclusive set of investments, explain the potential conflict and the way it should be solved with
supporting examples.

53. The NPV rule and PI give the same results when there is no conflict. In the case of capital
rationing, explain the potential conflict and the way it should be solved with supporting examples.
54. List and briefly discuss the advantages and disadvantages of the internal rate of return (IRR)
rule.

55. Given the goal of maximization of firm value and shareholder wealth, we have stressed the
importance of net present value (NPV). And yet, many financial decision-makers at some of the
most prominent firms in the world continue to use less desirable measures such as the payback
period and the average accounting return (AAR). Why do you think this is the case?
 Chapter 7 Key

1. A $25 investment produces $27.50 at the end of the year with no risk. Which of the following is
not true?

A. NPV is positive if the interest rate is less than 10%.

B. NPV is negative if the interest rate is less than 10%.
C. NPV is zero if the interest rate is equal to 10%.
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 07-01 Why Use Net Present Value?
Ross - Chapter 07 #1

2. Accepting positive NPV projects benefits the stockholders because:

A. it most easily understood valuation process.

B. the value of the expected cashflows are equal to the cost.
C. the value of the expected cashflows are greater than the cost.
D. it is the most easily calculated.
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 07-01 Why Use Net Present Value?
Ross - Chapter 07 #2

3. Which of the following does not characterize NPV?

A. NPV is the simplest of all investment rules.

B. NPV incorporates all relevant information.
C. NPV uses all of the project's cash flows.
D. NPV discounts all future cash flows.
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 07-01 Why Use Net Present Value?
Ross - Chapter 07 #3

4. If a project is assigned a required rate of return equal to zero, then:

A. the timing of the project's cash flows has no bearing on the value of the project.
B. the project will always be accepted.
C. the project will always be rejected.
D. whether the project is accepted or rejected will depend on the timing of the cash flows.
Accessibility: Keyboard Navigation
Difficulty: Easy
 Learning Objective: 07-01 Why Use Net Present Value?
Ross - Chapter 07 #4

5. Payback is frequently used to analyze independent projects because:

A. it considers the time value of money.

B. all relevant cash flows are included in the analysis.
C. it is easy and quick to calculate.
D. it is the most desirable of all the available analytical methods from a financial perspective.
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 07-02 The Payback Period Rule
Ross - Chapter 07 #5

6. The payback period rule accepts all investment projects in which the payback period for the
cash flows is:

A. greater than or equal to the cut-off point.

B. greater than the cut-off point.
C. less than the cut-off point.
D. positive.
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 07-02 The Payback Period Rule
Ross - Chapter 07 #6

7. Consider an investment with an initial cost of $20,000 and is expected to last for 5 years. The
expected cash flow in years 1 and 2 are $5000, in years 3 and 4 are $5,500 and in year 5 is
$1,000. The total cash inflow is expected to be $22,000 or an average of $4,400 per year.
Compute the payback period in years.

A. 3.18
B. 3.82
C. 4.55
D. 4.00
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 07-02 The Payback Period Rule
Ross - Chapter 07 #7
8. An investment project is most likely to be accepted by the payback period rule and not
accepted by the NPV rule if the project has:

A. a large initial investment with moderate positive cash flows over a very long period of time.
B. a very large negative cash flow at the termination of the project.
C. most of the cash flow at the beginning of the project.
D. All projects approved by the payback period rule will be accepted by the NPV rule.
E. The payback period rule and the NPV rule cannot be used to evaluate the same type of
projects.
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 07-02 The Payback Period Rule
Ross - Chapter 07 #8

9. The discounted payback rule states that you should accept projects:

A. which have a discounted payback period that is greater than some pre-specified period of
time.
B. if the discounted payback is positive and rejected if it is negative.
C. only if the discounted payback period equals some pre-specified period of time.
D. if the discounted payback period is less than some pre-specified period of time.
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 07-03 The Discounted Payback Period Rule
Ross - Chapter 07 #9

10. An investment with an initial cost of $16,000 produces cash flows of $5000 annually. If the
cash flow is evenly spread out over the year and the firm can borrow at 10%, the discounted
payback period is _____ years.

A. 4.55
B. 4.05
C. 3.20
D. 3.52
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 07-03 The Discounted Payback Period Rule
Ross - Chapter 07 #10
11. An investment project has the cashflow stream of -250, 75, 125, 100, and 50. The cost of
capital is 12%. What is the discount payback period?

A. 2.5 years.
B. 2.7 years.
C. 3.38 years.
D. 1.40 years.
E. 1.25 years.
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 07-03 The Discounted Payback Period Rule
Ross - Chapter 07 #11

12. The discounted payback period rule:

A. considers the time value of money.

B. discounts the cutoff point.
C. ignores uncertain cash flows.
D. is preferred to the NPV rule.
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 07-03 The Discounted Payback Period Rule
Ross - Chapter 07 #12

13. The payback period rule:

A. determines a cutoff point so that all projects accepted by the NPV rule will be accepted by
the payback period rule.
B. determines a cutoff point so that depreciation is just equal to positive cash flows in the
payback year.
C. requires an arbitrary choice of a cut-off point.
D. varies the cut-off point with the interest rate.
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 07-02 The Payback Period Rule
Ross - Chapter 07 #13
14. Which one of the following statements is correct concerning the payback period?

A. An investment is acceptable if its calculated payback period is less than some pre-specified
period of time.
B. An investment should be accepted if the payback is positive and rejected if it is negative.
C. An investment should be rejected if the payback is positive and accepted if it is negative.
D. An investment is acceptable if its calculated payback period is greater than some pre-
specified period of time.
E. An investment should be accepted any time the payback period is less than the discounted
payback period, given a positive discount rate.
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 07-02 The Payback Period Rule
Ross - Chapter 07 #14

15. It will cost $3,000 to acquire a small ice cream cart. Cart sales are expected to be $1,400 a
year for three years. After the three years, the cart is expected to be worthless as that is the
expected remaining life of the cooling system. What is the payback period of the ice cream
cart?

A. 0.83 years.
B. 1.14 years.
C. 1.83 years.
D. 2.14 years.
E. 2.83 years.
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 07-02 The Payback Period Rule
Ross - Chapter 07 #15

16. A project has an initial cost of $8,600 and produces cash inflows of $3,200, $4,900, and
$1,500 over the next three years, respectively. What is the discounted payback period if the
required rate of return is 8%?

A. 2.05 years
B. 2.13 years
C. 2.33 years
D. 3.00 years
E. never
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 07-03 The Discounted Payback Period Rule
Ross - Chapter 07 #16
17. Ginny is considering an investment which will cost her $120,000. The investment produces no
cash flows for the first year. In the second year the cash inflow is $35,000. This inflow will
increase to $55,000 and then $75,000 for the following two years before ceasing permanently.
Ginny requires a 10% rate of return and has a required discounted payback period of three
years. Ginny should _______ this project because the discounted payback period is ______.

A. accept; 2.03 years

B. accept; 2.97 years
C. accept; 3.97 years
D. reject; 3.03 years
E. reject; 3.97 years
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 07-03 The Discounted Payback Period Rule
Ross - Chapter 07 #17

18. The average accounting rate of return is determined by:

A. dividing the yearly cashflows by the investment.

B. dividing the average cashflows by the investment.
C. dividing the average net income by the average investment.
D. dividing the average net income by the initial investment.
E. dividing the net income by the cashflow.
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 07-04 The Average Accounting Return
Ross - Chapter 07 #18

19. The investment decision rule that relates average net income to average investment is the:

A. discounted cash flow rule.

B. average accounting rate of return method.
C. average payback rule.
D. average profitability index.
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 07-04 The Average Accounting Return
Ross - Chapter 07 #19
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Title: A woman's debt

Author: William Le Queux

Release date: November 5, 2023 [eBook #72041]

Language: English

Original publication: London: Ward, Lock & Co, 1924

Credits: Bob Taylor, Tim Lindell and the Online Distributed

Proofreading Team at https://www.pgdp.net (This file was
produced from images generously made available by The
Internet Archive/Canadian Libraries)

*** START OF THE PROJECT GUTENBERG EBOOK A WOMAN'S

DEBT ***
A WOMAN’S DEBT
 SUCCESSFUL NOVELS
BY
WILLIAM LE QUEUX
Published by
WARD, LOCK & CO., Limited,
in various editions.

THE LITTLE BLUE GODDESS

AS WE FORGIVE THEM
THE DAY OF TEMPTATION
AN EYE FOR AN EYE
GUILTY BONDS
THE IDOL OF THE TOWN
IF SINNERS ENTICE THEE
IN WHITE RAIMENT
THE LURE OF LOVE
THE MYSTERIOUS THREE
NO GREATER LOVE
THE PLACE OF DRAGONS
THE SIGN OF SILENCE
THE TEMPTRESS
THE WILES OF THE WICKED
THE HOTEL X
THE HEART OF A PRINCESS
THREE KNOTS
THE YOUNG ARCHDUCHESS
No. 7 SAVILLE SQUARE
THE LADY-IN-WAITING
SCRIBES AND PHARISEES
THE BRONZE FACE
A WOMAN’S DEBT
THE SIGN OF THE STRANGER
THE BOND OF BLACK
THE BROKEN THREAD
THE COURT OF HONOUR
SINS OF THE CITY
THE MARKED MAN
WHOSO FINDETH A WIFE
A MAKER OF SECRETS
THE VALROSE MYSTERY
THE BLACK OWL
THE SCARLET SIGN
THE HOUSE OF EVIL
 A WOMAN’S
DEBT

BY
WILLIAM LE QUEUX
Author of “The Temptress,” “The Way of Temptation,”
“The Hotel X,” “The Bronze Face,” etc.

WARD, LOCK & CO., LIMITED

LONDON AND MELBOURNE
Printed in Great Britain by Butler & Tanner Ltd., Frome and London
 To
RUBY GRAYSON
 CONTENTS
CHAP. PAGE

I A Lucky Young Fellow! 9

II The Rifled Safe 18
III Richard is Dismissed 25
IV Gideon Lane takes a Hand 34
V Rosabelle and Lane Confer 47
VI Lane Engages an Assistant 54
VII The Head Waiter 63
VIII Mrs. Morrice’s Girlhood 73
IX Important Information 80
X The Safe is Robbed Again 89
XI A Rift in the Clouds 96
XII Sir George’s Valet 103
XIII Aunt and “Nephew”! 113
XIV An Alarming Interruption 120
XV The Anonymous Letter 130
XVI At Scotland Yard 141
XVII Lane Visits Richard 146
XVIII Mrs. Morrice’s Dress 153
XIX Miss Alma Buckley 161
XX Rupert Morrice sends for Lane 169
XXI Rosabelle has a Grievance 176
XXII Husband and Wife 185
XXIII Richard is Cleared 194
 XXIV Lane Makes a Call 205
XXV Mrs. Morrice’s Confession 210
XXVI The Story Continued 219
XXVII In Vino Veritas 228
XXVIII Blackmailed! 235
XXIX Sir George is Arrested 244
XXX Rupert Morrice Makes Amends 252
A WOMAN’S DEBT
 CHAPTER I
A LUCKY YOUNG FELLOW!

“Y OU’RE a lucky chap, Croxton, to have got the measure of the

old man so well. I don’t suppose it will be long before you
blossom into a partner.”
The speaker, Archie Brookes, a slim elegant young fellow, very
good-looking but with a somewhat effeminate expression, cast a
sidelong glance at his companion as he uttered the remark, to
observe covertly what impression it made upon him.
There was no love lost between these two young men, although
they were thrown constantly into each other’s society. Richard
Croxton was the confidential secretary of Rupert Morrice, the well-
known foreign banker and financier, whose firm had colossal
dealings abroad. Brookes was a nephew and great favourite of the
financier’s wife, the son of a dearly beloved sister who had died
many years ago. In consequence of that relationship, and the
partiality of his aunt, he was a frequent, almost a daily, visitor to the
big house in Deanery Street, Park Lane, where the Morrices
entertained largely and dispensed lavish hospitality.
Croxton’s voice was very cold, as he replied to the other’s
suggestion. “Those are the sort of things one does not permit oneself
to speculate about, much less to discuss.”
For a second an angry gleam showed in the light blue eyes of
Brookes. Not troubled with very refined feelings himself, he thought it
was rank hypocrisy on the part of Richard to refuse to talk to a man
of his own age about prospects upon which he must often have
meditated. But the angry gleam passed away quickly. Archie
Brookes was a very self-contained young man. He seldom allowed
his temper to get the better of him, and he never indulged in
sarcastic remarks.
 “Ah, you’ve got a very wise head upon your shoulders, Dick,” he
said in a genial tone, and accentuating his air of good-fellowship by
the unfamiliar use of the Christian name. “You’ll never let your
tongue give you away. But I am sure it will be as I say. Uncle Rupert
thinks the world of you, and he has no near relative of his own. What
more natural than that you should succeed?”
To his emphatic reiteration of his previous remarks, Richard made
no reply. While always perfectly civil to this elegant-mannered young
man for whom he felt a vague dislike, he never encouraged intimacy.
He was just a little resentful that he had been addressed as “Dick.”
Nothing in the world would have induced him to accost the other as
“Archie,” although they met nearly every day, and the one was the
favourite nephew of the mistress of the house, and the other was as
good as the adopted son of the master.
There was a certain element of romance about the introduction of
Richard Croxton into the Morrice ménage. The great financier, hard
as iron in his business dealings, was in private life a man of the
greatest sentiment and sensibility. Some years before he met the
lady who was now his wife, he had been desperately in love with a
charming girl, who had been one of the fashionable beauties of the
day.
The fate of this lovely girl had been a sad and tragic one. With the
world at her feet, she had bestowed her affections upon a man
utterly unworthy—a rake, a gambler—and a spendthrift, and
alienated her friends and her family by marrying him. On her death-
bed she had sent for her old lover and confided her only child to his
care. Rupert Morrice had accepted the trust, his heart warming to the
son, as he grew to know him, not only for his own qualities, but for
the sake of the mother whom he had so fondly loved with the
passionate ardour of a strong, intense nature.
He had taken the young fellow into his own house and made him
his confidential secretary. Some women might have resented such a
sudden intrusion, but Mrs. Morrice was not of a petty or jealous
nature. She grew in time to be very fond of Richard Croxton, and did
not in the least begrudge him his place in her husband’s affections.
 There sauntered up to the two young fellows a very distinguished-
looking man of about fifty years of age. Aristocrat was written all over
him—in his tall, elegant figure, his aquiline features, his long,
shapely, well-manicured hands, his cultivated and well-bred voice.
This was Sir George Clayton-Brookes, the paternal uncle of Archie,
a well-known personage in London society, a member of some of the
most exclusive clubs, and, report said, the possessor of considerable
wealth. He had added the name of Clayton on inheriting a fortune
from a distant relative.
He greeted Croxton with an air of great cordiality. His manners
were very polished, some people thought they were just a trifle too
suave for perfect sincerity.
“Well, my dear Richard, how goes the world with you?” Using the
privilege of seniority, he always addressed the young man by his
Christian name. For his part, Croxton did not always feel anything
like the same antagonism towards the uncle that he felt for the
nephew, but he did not really like him. There was something too oily
about the man for his taste.
Some commonplace reply was made to this inquiry, and Sir
George went on in his smooth, well-bred tones.
“A charming gathering, everything perfect and in good taste, as
usual. I really think this is almost the most pleasing house in London;
luxury without ostentation, wealth without oppressive magnificence.
But then who can wonder at it when you have host and hostess who
pull together so splendidly?”
He was a great hand at compliments, this elegant-mannered man
of the world, well-known on every race-course in England, well-
known in Paris and at Monte Carlo, where he played with varying
fortune, sometimes winning, more frequently losing. For he was an
inveterate gambler.
And in paying his flowery compliments, either directly, or as in this
case, obliquely through the medium of a third party, he generally laid
it on with a trowel, so to speak. But to-night, in praising the Morrices
as he did, he was not speaking much more than the truth.
 For wealthy as they were, both Morrice and his wife loathed
anything in the shape of ostentation. They left that to the nouveau
riche. The man had been used to riches from a boy, they were no
novelty to him, for his grandfather had founded the great business of
which he had for so many years been the head. His wife, though
poor for her position, was said to be descended from a very old
family. Such people as these were not likely to shock their friends
and acquaintances with vulgar display.
The house in Deanery Street looked very charming with its softly
shaded lights, its profusion of flowers, its crowd of beautifully
dressed women and well-groomed men. It wanted about three
weeks to Christmas. Very shortly the host and hostess were leaving
for a month’s sojourn at Mürren, to enjoy the ski-ing. Richard
Croxton and Rosabelle Sheldon, a niece and ward of the financier,
were to accompany them.
Sir George, who was a great talker, proceeded with his
complimentary remarks.
“Yes, certainly, one of the most charming houses in London, if not
actually the most charming. Astonishing how a place takes its
atmosphere and tone from the people who run it! Dear old Rupert is
one of the best, and his wife is so tactful and refined.” He gave a little
involuntary sigh. “Ah, it is wonderful what wealth can do, combined
with tact and manners.”
Young Croxton looked at him wonderingly. That sigh seemed very
heartfelt. Sir George was reputed to be wealthy, he surely could not
be envious of another man’s riches. He could not be envious either
of the tact and manners of his hosts, for he was credited with the
possession of both in great abundance.
He caught the young man’s puzzled look, and hastened to explain.
“I am not a pauper myself, and I can make a bit of a show when I
want to—but of course nothing to compare with this. Rupert is
wealthy beyond the dreams of avarice. He thinks in millions, where
we little men think only in thousands.”
 Richard thought he understood. Sir George’s habits were pretty
well-known. He betted on every race; cards and all forms of
gambling had for him a fatal allurement. With such weaknesses, a
rich man might often find himself temporarily poor.
“You are a lucky young fellow, my dear Richard, to have been
brought up under the careful guidance of such a wise mentor as
Rupert Morrice. The man is sound to the core; no weaknesses, no
failings. He has told me that he has never touched a card in his life,
nor made a bet. And yet, withal, he is not a bit of a Puritan.”
Richard was quite aware of the fact that he was a very lucky
person; that, thanks perhaps mostly to that old love-affair, he had
won the favour of the wealthy financier. But he was not over-pleased
to have the fact rubbed into him so very persistently by this smooth-
mannered man of the world, whose attitude towards himself, he
fancied, always showed a trace of bland superiority.
He wished that he could get away from the too close proximity of
the uncle and nephew, and was meditating how best to accomplish
his object, when Providence intervened in the shape of Rosabelle
Sheldon, who fluttered up to them.
She was a very charming person, this good-looking girl over
whose fair head some twenty-two summers had passed. Her blue
eyes looked at you with a full unwavering glance that told you there
was no meanness or pettiness in her composition, that she was
open and frank. She had a fine figure, a splendid complexion, an
exquisite mouth, which, when she smiled, revealed perfect teeth.
She was a merry-hearted girl, fond of dancing, fond of sport, loving
an outdoor life, and of a most equable temper. But sunny as was her
normal disposition, she was capable of grave moods when occasion
called them forth, and could be very serious when she was deeply
moved.
“I am dying for an ice. Please take me and get me one, Dick, that
is if I am not interrupting an important conversation,” she said,
addressing the young man.
 Sir George regarded her with that benign smile of his which, when
he bestowed it upon women, suggested a subtle flattery and
appreciation of their charm.
“You’ve been enjoying yourself very much, I can see, my dear
Rosabelle, from the happy light on your expressive face. But I wager
you will enjoy yourself more at Mürren, delightful as this evening has
been, and is.”
The girl laughed gaily. “Oh, Sir George, how well you understand
me. I enjoy nearly everything, you know; I am made that way. But
above all things, I am an out-of-door girl, and I prefer to take my
pleasures in the open air when possible.”
She went away on Richard’s arm, leaving uncle and nephew
standing together side by side.
“Two types of people born with silver spoons in their mouths,”
remarked the elder man in his smooth, even voice. “She is the apple
of old Rupert’s eyes, and young Croxton is as dear to him as a son.
They will ultimately get the millions the old man has piled up. And
unless I am very much mistaken, there is already a pretty good
understanding between the young couple, and the millions will be
united.”
The nephew had not spoken up to the present. Truth to tell, when
Sir George was there with his ceaseless flow of urbane small talk, it
was not very easy for another person to get a hearing, but now he
found voice.
“I have not the slightest doubt of that. The old boy seems to
approve, apparently has no wish that she should look higher, and my
aunt doesn’t disapprove, although I don’t think it would greatly affect
matters if she did. Miss Rosabelle, good-tempered as she is, has a
very strong will of her own in things that affect her strongly, and the
old man, being so fond of them both, would take their part against
his wife.”
Sir George shrugged his shoulders. “What must be will be. It is a
pity though that this young Croxton has fascinated her. But for him,
you might have had a chance, and of course you would have had
your aunt’s backing.”
“I’m not the sort that finds favour in the eyes of men like Morrice,”
said the nephew curtly. “He leads too strenuous a life himself to take
very kindly to an idler like me. And Croxton might be his own son
from certain aspects of his character. He’s a tremendous worker, like
the old man, and I fancy Rosabelle prefers the strenuous type
herself, and that she has no great liking for people who just saunter
through life.”
“Strange that Morrice should work so hard at his time of life,
although of course fifty-five is not a very great age. You’d think he
had millions enough without slaving to pile up a few more for the
young people to spend. And he has no vices, no weaknesses to run
away with his money.” And again Sir George indulged in that rather
melancholy sigh as he gave utterance to these sage remarks.
“He’ll die in harness as his father and grandfather died before
him,” said the young man decidedly. “It’s ingrained in them. But it
does seem a pity that there’s nobody of his own blood to take the
reins, I mean of course in the male line. But see, my aunt is
beckoning me. We shall meet as usual to-morrow, if I don’t come
across you again to-night.”
Sir George made his exit; evening parties did not appeal to him
greatly. He went to one of his clubs where he was sure to find some
eager gambling spirits like himself, and Archie Brookes made his
way through the crowded rooms to his aunt, with whom he held a
long conversation.
Mrs. Morrice was a handsome, charming mannered woman, some
five years younger than her husband. Rupert Morrice had remained
a bachelor till he was thirty-five, faithful to the memory of the
beautiful girl who had made such a tragic wreck of her life, and then
he had put the past away from him as far as it was possible, and
married his present wife.
His father had died young, and he had been at the head of affairs
for some six years and was a man of very considerable wealth, for