Review%20Questions%20test%20# 1

Review%20Questions%20test%20# 1 - was to accumulate...

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Review Questions/Problems for Test # 1 1. During the latest year Ruth Corp. had sales of $300,000 and a net income of $20,000 and its year-end assets were $200,000. The firm’s total debt to total assets ratio was 40%. Based on the DuPont equation what was the firms’s Return on Equity (ROE)? 2. At the end of the current year, Smith Software Inc. reported $25 million of net income and $405 million of retained earnings. The previous year, Smith had $390 million in retained earnings. What were the total dividends paid to shareholders during the most recent year? 3. If you were given $25,000 today and invested it earning 7.5% compounded annually, how much would it grow to at the end of 10 years if you never added any additional money?
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4. How much would you have to save at the end each year, assuming your goal
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Unformatted text preview: was to accumulate $100,000 at the end of the 10 th year? You have estimated that you can earn 6% annually. 5. How many years would it take you to double your money assuming you could earn 6% compounded annually? 6. You have just been informed that you have won the lottery. You have 2 choices. You can either take a lump sum payment of $1,000,000 today or $75,000 per year at the end of each year for 20 years. You assume that your could earn 7%? Calculate which option would be the best choice using present value analysis? 7. What is the Profit Margin given the following: Return on Equity =10% Total Assets=$1,000,000 Total Asset Turnover =1.5 Total Equity = $750,000...
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This test prep was uploaded on 04/12/2008 for the course BUS 320 taught by Professor Sloan during the Fall '08 term at N.C. State.

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Review%20Questions%20test%20# 1 - was to accumulate...

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