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Unformatted text preview: 1st Midterm UGBA 103 February 18, 2009 Name___________________________________ 1) Which of the following organization forms accounts for the greatest number of rms? A) Sole Proprietorship B) "S" Corporation C) Limited Partnership D) "C" Corporation 1) 2) You own 100 shares of a "C" Corporation. The corporation earns $5.00 per share before taxes. Once the corporation has paid any corporate taxes that are due, it will distribute the rest of its earnings to its shareholders in the form of a dividend. If the corporate tax rate is 40% and your personal tax rate on (both dividend and non- dividend) income is 30%, then how much money is left for you after all taxes have been paid? A) $210 B) $300 C) $350 D) $500 2) 3) An investment is said to be liquid if the investment A) can easily be converted into cash. B) has large day to day uctuations in price. C) is traded on a stock exchange. D) has a large bid- ask spread. 3) 4) Which of the following balance sheet equations is incorrect? A) Assets = Liabilities + Shareholders' Equity B) Assets- Current Liabilities = Long Term Liabilities + Shareholders' Equity C) Assets- Current Liabilities = Long Term Liabilities D) Assets- Liabilities = Shareholders' Equity 4) 5) The third party who checks annual nancial statements to ensure that they are prepared according to GAAP and veries that the information reported is reliable is the A) NYSE Enforcement Board. B) Accounting Standards Board. C) auditor. D) Securities and Exchange Commission (SEC). 5) A- 1 Use the information for the question(s) below. market price Alaska North Slope Crude Oil (ANS) $71.75/Bbl West Texas Intermediate Crude Oil (WTI) $73.06/Bbl As an oil refner, you are able to produce $76 worth oF unleaded gasoline From one barrel oF Alaska North Slope (ANS) crude oil. Because oF its lower sulFur content, you can produce $77 worth oF unleaded gasoline From one barrel oF West Texas Intermediate (WTI) crude. 6) Assuming you currently have 10,000 Bbls oF WTI crude, the added beneft (cost) to you iF you were to sell the 10,000 Bbls oF WTI crude and use the proceeds to purchase and refne ANS crude is closest to: A) ($1,400) B) $1,400 C) ($3,908) D) $3,908 6) 7) Suppose you have $500 today and the risk- Free interest rate ( r f ) is 5%. The equivalent value in one year is closest to: A) $475 B) $476 C) $500 D) $525 7) 8) You are offered an investment opportunity in which you will receive $23,750 today in exchange for paying $25,000 in one year. Suppose the risk- free interest rate is 6% per year. Should you take this project? The NPV for this project is closest to: A) Yes; NPV = $165 B) No; NPV = $165 C) Yes; NPV = - $165 D) No; NPV = - $165 8) Use the table for the question(s) below....
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