Answers%20to%20Exam%202

Answers%20to%20Exam%202 - Finance 36053 Examination 2 March...

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Finance 36053 Examination 2 March 20, 2003 Print Your Name_____________________________ Each question is worth 4 points. Circle the correct answer. On page 5 PRINT YOUR NAME AGAIN 1. Suppose you have the 1999 income statement for a firm, along with the 12/31/1998 and 12/31/1999 balance sheets. How would you calculate net capital spending? A) Ending net fixed assets (12/31/1999) minus beginning net fixed assets (12/31/1998) plus 1999 depreciation B) Beginning net fixed assets (12/31/1998) minus ending net fixed assets (12/31/1999) plus 1999 depreciation C) Beginning net fixed assets (12/31/1998) plus ending net fixed assets (12/31/1999) minus 1999 depreciation D) Ending net fixed assets (12/31/1999) minus beginning net fixed assets (12/31/1998) plus 1999 taxes paid E) Ending net fixed assets (12/31/1999) plus beginning net fixed assets (12/31/1998) minus 1999 taxes paid Answer A 2. Which of the following financial statement items is generally considered the most liquid? A) Inventory B) Net fixed assets C) Long-term debt D) Patents and trademarks E) Accounts receivable Answer E 3. An income statement ________. A) measures performance as a snapshot on a specific date B) prepared according to GAAP will show revenue when it accrues C) includes accrued taxes payable D) includes expenses only when they are ultimately paid off in cash E) is an accurate representation of a firm's net cash flows Answer B 4. A firm with negative net working capital ________. A) is technically bankrupt B) has no cash on hand C) needs to sell some of its inventory to correct the problem D) have more current liabilities than current assets E) most likely will not run short of cash over the next six months Answer D
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2 5. The net present value (NPV) rule can be best stated as: A) An investment should be accepted if, and only if, the NPV is exactly equal to zero. B) An investment should be rejected if the NPV is positive and accepted if it is negative. C) An investment should be accepted if the NPV is positive and rejected if it is negative. D)
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This note was uploaded on 12/13/2009 for the course MBA 816 taught by Professor Terry during the Spring '09 term at Fort Hays.

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Answers%20to%20Exam%202 - Finance 36053 Examination 2 March...

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