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finexam_su10 - Financial Analysis with Microsoft Excel

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FIN 615 Final Exam 1. The following procedure is recommended when creating financial statements in Excel, in order to minimize error and make the statements easier to read when provided to others: a. Use custom number formats b. Make excel do as little work as possible by avoiding the use of formulas c. Use as many fonts and colors as possible in order to separate line items and subheadings d. Hide data you do not want others to see before distributing a worksheet 2. Which of the following is the correct formula for cell B5 to calculate the earnings per share? a. =B2-B3*B2/B4 b. =(B2-B3)/B4 c. =B2*(1-B3)/B4 d. =(B2+B3*B2)/B4 e. =B2*(1+B3)/B4 3. Suppose that you are approached with an offer to purchase an investment that will provide cash flows of \$1,200 per year for 15 years. The cost of purchasing this investment is \$9,800. If you have an alternative investment opportunity, of equal risk, that will yield 8% per year, how would you determine which one to accept? 4. You are thinking of buying a miniature golf course to operate. It is expected to generate cash flows of \$40,000 per year in years one through four and \$50,000 per year in years five through eight. If the appropriate discount rate is 10%, what is the present value of these cash flows? 1

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