Corp.fin, Final solution

Corp.fin, Final solution - FINAL EXAM Name _ 1. A business...

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FINAL EXAM Name __________________ 1. A business created as a distinct legal entity composed of one or more individuals or entities is called a: a. corporation. b. sole proprietorship. c. general partnership. d. limited partnership. e. unlimited liability company. 2. Depreciation: a. is a noncash expense that is recorded on the income statement. b. increases the net fixed assets as shown on the balance sheet. c. reduces both the net fixed assets and the costs of a firm. d. is a non-cash expense which increases the net operating income. e. decreases net fixed assets, net income, and operating cash flows. 3. Your firm has net income of $198 on total sales of $1,200. Costs are $715 and depreciation is $145. The tax rate is 34%. The firm does not have interest expenses. What is the operating cash flow? a. $93 b. $241 c. $340 d. $383 e. $485 Solution : Earnings before interest and taxes = $1,200 - $715 - $145 = $340; Tax = [$198 ÷
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(1 -0.34)] - $198 = $102; Operating cash flow = $340 + $145 - $102 = $383 4. The cash ratio is measured as: a. current assets divided by current liabilities. b. current assets minus cash on hand, divided by current liabilities. c. current liabilities plus current assets, divided by cash on hand. d. cash on hand plus inventory, divided by current liabilities. e. cash on hand divided by current liabilities. 5. The rate of interest is 9.3%. Which form of compounding will give the highest effective rate of interest? a. annual compounding b. monthly compounding c. daily compounding d. continuous compounding e. It is impossible to tell without knowing the term of the loan. 6. An annuity:
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Corp.fin, Final solution - FINAL EXAM Name _ 1. A business...

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