Midterm%20I%20-%20Sample - BUAD 306 FALL 2008 Business...

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BUAD 306 Business Finance FALL 2008 Midterm I - Sample INSTRUCTIONS You have one hour and fifty minutes to complete this exam. There are 21 questions . This exam is closed book and closed notes . You are provided with a formula sheet that contains any relevant equations. Calculators are allowed. IMPORTANT : Provide your Student ID Number (or SSN) on both sides of the Scantron sheet. Copy all of your final answers onto the Scantron sheet. Please mark or erase properly to avoid mis-grades. Hand in both questions and answer sheet. This exam is taken under the Student Conduct Code, which stipulates: Any use of external assistance during an examination shall be considered academically dishonest unless expressly permitted by the instructor. The following are considered unacceptable examination behaviors: communicating with fellow students during an exam, copying material from another student’s exam, allowing another student to copy from an exam, possession or use of unauthorized notes, calculator, or other materials during exams and/or any behavior that defeats the intent of an exam or other classwork. Please sign your name below to acknowledge and accept the Student Conduct Code. SIGNATURE: (Please sign) NAME: (Please print) STUDENT ID (or SSN):
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1. A conflict of interest between the stockholders and company management is called: A. corporate activism. B. the agency problem. C. stockholders' liability. D. corporate breakdown. E. legal liability. 2. Which of the following are advantages of the corporate form of business ownership? I. limited liability for firm debt II. double taxation III. ability to raise capital IV. unlimited firm life 3. A firm has $680 in inventory, $2,320 in fixed assets, $280 in accounts receivables, $490 in accounts payable, and $130 in cash. What is the amount of the current assets? 4. Given the tax rates as shown, what is the average tax rate for a firm with taxable income of $218,740?
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5. At the beginning of the year, long-term debt of a firm is $68,700 and total debt is $71,425. At the end of the year, long-term debt is $92,460 and total debt is $95,609. The interest paid is $5,412. What is the amount of the cash flow to creditors? A. $2,414 B. $23,760 C. $29,172 D. $12,936 E. $18,348
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