BCOR 2200 Fall 2010 Midterm 1 with Answers

BCOR 2200 Fall 2010 Midterm 1 with Answers - BCOR 2200 Fall...

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BCOR 2200 – Fall 2010 Midterm 1 with Answers Dr. David M. Gross Name (please print): ________________________________________________ Note: last, first, middle initial Student ID Number (NOT social security number): __________________________ You are expected to follow the Honor Code during this Exam and sign below to acknowledge this. Honor Code “On my honor, as a University of Colorado at Boulder student, I have neither given nor received unauthorized assistance on this work.” Signature: _____________________________________________ Instructions: 1.Check your exam to make certain you have 37 questions--all questions are worth the same value. 2.Please carefully detach the formula sheet from the back of the exam. 3. Bubble in your NAME , the DATE (9/30/10) and your CU ID on the answer sheet. 4. Carefully enter answers on the computer-graded answer sheet. Only answers on the answer sheet will be scored. Answers on the question sheets will not be scored. 5.Please show your student ID to a TA when requested. 6.You have ONE HOUR and FIFTEEN MINUTES to complete the exam. This INCLUDES the time needed to enter your answers on the answer sheet. 7.Please TURN IN your QUESTION SHEET , ANSWER SHEET and FORMULA SHEET . 8.Please note: Baseball hats must be turned backwards; sharing calculators is not allowed; turn off and do not handle cell phones, pagers, MP3 players, PDA’s…. 1
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1. What goal should always motivate the actions of the firm’s financial manager? a. Maximize Sales b. Maximize the book value of Current Assets c. Maximize the market value of Current Assets d. Maximize the book value of Equity e. Maximize the market value of Equity 2. Which of the following is a Capital Budgeting Decision (as opposed to Capital Structure or Working Capital Management decision)? I. Deciding whether to issue new equity in order to retire debt II. Deciding on whether to expand a manufacturing plant III. Modifying the company’s credit collection policy with its customers IV. Modifying the company’s payment policy for credit extended by suppliers a. I only b. II only c. I and II only d. III and IV only e. All of the above 3. Which of the following are current assets? I. Inventory II. Land III. Patents IV. Accounts Receivable a. I and II only b. I and III only c. I and IV only d. I, II and IV only e. All are current assets 4. A company has current assets of $20,000, net fixed assets of $120,000, current liabilities of $10,000, and long-term debt of $60,000. Calculate the company’s debt-equity ratio. a. 0.6 E = CA + NFA – CL – LTD = 20 + 120 – 10 – 60 = 70 b. 1.0 D = CL + LTD = 10 + 60 = 70 2
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c. 1.4 D/E = 36/70 = 1.0 d. 19.8 e. 51.0 5. A company has sales of $500,000, costs of $250,000, depreciation expense of $75,000, interest expense of $45,000 and a tax rate of 40%. The company also paid out total cash dividends of $49,000. Calculate the Plowback Ratio. a.
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BCOR 2200 Fall 2010 Midterm 1 with Answers - BCOR 2200 Fall...

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