Test 1 - x 1. Managers of firms should only take actions...

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Unformatted text preview: x 1. Managers of firms should only take actions that — 04) increase the value ofthe firm's future cash flows. OB) they expect will increase the firm's share price. @C) have benefits which are at least as great as the cost ofithose actions. 0 D) all of the above Points Earned: 0.0/1.0 Correct An swer(s): D x 2. One ofthe tasks for financial managers when identifying projects that increase firm value is to identify those projects where 00) benefits are at least equal to the project's costs. OB) taking the project will increase the book value ofthe firm's common stock. 0C) taking the project will decrease the book value ofthe firm's debt outstanding @D) none ofthe above Points Earned: 0.0/1.0 Correct Answer(s): A we. Prior to the Tax Relief/ict of 2003, if a corporation has pre-tax earnings of $110,000 while the corporation is subject to a 35% income tax rate and an investor is subject to a 35% personal tax rate, then what is the after-tax income that the investor could capture it all ofthe firm's earnings are paid out in dwidends? 04) $71,500 0) a) $40,475 0 o) $44,330 0 0) $42,204 Points Earned: 1.0/1.0 Correct An swer(s): B V 4. Virtualw all finance jobs require: 00) Teamwork OB) Good communication sblls O C) Proficiency with computers (9 D) All of the above 0 E) Both (a) and (cl Points Earned: 1.0/1.0 Correct Answer(s): D V 5. What are the responsibilities olthe board of directors in a corporation? Done einternet 33 v fijioogfi . f4 Test 1 -Windews Internet Explorer fl htga://rsu.angelleaming.com[Section/hssessment/Question/CradeDeliveryaspx?entryld=A4Fi5ti’F270i3i68448B8hF7BD77CDAB055C&response_ld=F65DF692A4BF4EEC ASBE (9??) Hire and fire managers. — OB] Manage day-to-day operations. 0C] Amend the firm's corporate charter when necessany. OD) Hire and fire entry level employees. Points Earned: 1.0/1.0 Correct Answer(s):h V 6. What do we call the possible conflict of interests between shareholders and management? (9??) Agency problem. OB] Stakeholder problem 0C] Double taxation OD] Shareholders' dilemma Points Earned: 1.0/1.0 — Correct Answerlslfli V I. Which form of business organ'eation allows shareholders to be taxed as partners while still retaining their limited liability status? 0??) Corporation OB] Partnership @Cl S Corporation OD] Sole Proprietorship Points Earned: 1.0/1.0 Correct Answer(s): C x 8. Worlung captal management: 0??) involves managing the firm‘s long-term assets, such as plant and equipment OB] Reguires very lttle in terms of people skills as it mostly involves anabyzing numbers 0C] Deals with the hrm's seasonal financing, inventory needs, collecting accounts receivable and investing surplus cash OD) ill olthe above @E] None ofthe above Points Earned: 0.0/1.0 Correct Answer(s): C w 9. Holding all other things constantr which otthe following represents a cash outflow? 0A] The company sells a machine. (9B) The company acquires inventory. 0C] The company receives a bank loan. v U 1:: 3 (13 @Internet a. v utigggfi . 5' Test 1 - Windows Internet Explorer w 10. Which 0fthe following is a liquidty ratio? @A) Qurck ratio OB) PlE— ratio OC) lnventoryturnover OD) Equity mutiplier Points Earned: 1.0,l1.0 Correct Answer(s): A X 11. Ifia company‘s net profit margin is 5% and ts total asset turnover is 3.5, what is ts RCA? 0A) 17.50% (03) 1.43% QC) 70.00% OD) 12.53% Points Earned: 0.0!10 Correct Answer(s): A X 12. The Park Corp. had earnings before interest and taxes of $500,000 and had a depreciation expense of $200,000 this last year. Itthe firm was subject to an average tax rate of 30%, what was Park‘s operating cash flow for the year? lfyou need to, assume that Park‘s interest expense was zero for the year. CA) $305,000 @0) $350,000 00) $450,000 00) $550,000 Points Earned: 0.0/1.0 Correct Answerls): D x 13. Devil Inc. has total liabil'ties equalto $3,500 and total assets equalto $5,000. What is Devil's asset-to-equty ratio? (0:01.43 OB) 2.33 QC) 3.33 OD) none olthe above Points Earned: 0.0,l1.0 Correct Answer(s): C w 14. What is the financial ratio that measures the price per share of stock dwided by earnings per share? OA) Return on assets ORl Return on eniiil'u _ Done anternet fa v 0110096 ' 6' Test 1 - Windows Internet Explorer fl hthJ://rsu.angelleaming.com/Section/llssessment/Question/GradeDelirery.asp><?entryld=04F/t7F270068448880180170008055C8response_ld=F65DF692MBF4EECASBE V 14. What is the financial ratio that measures the price per share of stock dirided by earnings per share? 011) Return on assets OB) Return on equity QC) Debt-equity ratio @D) Price-earnings ratio Points Earned: 1.0/ 1.0 Oorrect Answerls): D W 15. Which ofthe following is not a classification ofa hrm's cash flows: Oil) investment llows OB) financial flows QC) operating flows @D) captal flows Points Earned: 1.0/ 1.0 Correct Answerls): D w 16. Which ofthe following statements is wise? 01-1) A hrm's creditors are primarily interested in a hrm's llctirity Ratios. OB) Norms exist for all financial ratios that can be applied across all industries. QC) Current and future stockholders are most interested in a firm's short-term liquidity ratios. @D) All of the above statements are false. Points Earned: 1.0/ 1.0 Correct Answer/s): D i 17. Which ofthe following statements is true? Oil) In an annuity due payments occur at the end ofthe period. 038) In an ordinary annuity payments occur at the end ofthe period. 0C) A perpetuity will mature at some point in the future. OD) One cannot calculate the present value ofa perpetuity. Points Earned: 1.0/1.0 Oorrect Answerls):B V 18. You are offered a security that will pay you $2,500 at the end ofthe year forever. lfyour discount rate is 8%, what is the most you are willing to pay for this securty? 011] $26,666 On) $62,500 00 $50,000 Done @lnternet fa v ill/100% . | < 5' Test 1 - Windows Internet Explorer e http://rsuangellearningcom/Sectitin/Assessment/Question/GradeDelivery.asp><?entryld=A4FATF270068448080ETBD270DAE1055C&response_ld=E65DE692A4BF4EECASB J 18. You are offered a secur'ty that will pay you $2,500 at the end olthe year forever, llyour discount rate is 0%, what is the most you are willing to pay for this security? 00) $26,686 OB) $62,500 QC) $50,000 @D) $31,250 Points Earned: 1.0.11.0 Correct Answer(s): D X 19. Ilyou invested $2,000 in an account that pays 12% interest, compounded continuously, how much would be in the account in 5 years? ompmm omowm Omem omomm Points Earned: 0011.0 Correct Answerls): E w 20. Ilyou need $35,000 for a down payment on a house in six years, how much money must you invest today at 7% interest compounded annualh/ to achieve your goal? mommm mmomm mmomm 0mmmmz Points Earned: 1.0! 1.0 Correct Answer(s): C am. Great Lakes Christmas Tree Co. expects to pay an annual duidend of $2 per share in perpetuity on is preferred shares starting one year from now. The firm is committed solelyto its steady North American Christmas tree business (as opposed to, say, dnrersifying into landscape shrubbery). This profile warrants a required return of 6%, What is the present value olthis duidend stream for investors? Comm _ Come down ompo Points Earned: 1011.0 Correct Answerls): C x 22. Ilyou invest $2,500 in a bank account that pays 6% interest compounded monthly, how much Will you have in five years? Done QInternet fa v 11110096 7 | < 4’- Test 1 -Windows Internet Explorer x 22. Itpou invest $2,500 in a bank account that pays 6% interest compounded monthip, how much 4411 you have in five pears? 04) $1,053.43 051034550 0c) $2,505.20 On)$3,3r2.13 Points Earned: 0.0/1.0 Correct Answer(s): D w 23. Discounting is: 011] caiculating the hrture value of present cash flows. @B] caiculating the present vaiue of future cash flows. DC] is necessanp in order to pull present vaiues to the future. OD) none otthe above Points Earned: 1.0/1.0 Correct Answer(s): B X 24. What is the future value of cash flows 1-5 at the end of year 5, assuming a 65 inzeres: raze [compounded annually)? End of year Cash flow 1 $2,500 2 3,000 3 1,250 1 3,500 5 1,250 6 1,530 3 2,350 014) $13,029.30 00) $13,033.24 0c) $5,044.40 Ou)$u,54s.4s Points Earned: 0.0/1.0 Correct Answer(s): B V 25. Which of the following statements are TRUE? Statement I: As you increase the interest rate, the future value of an investment increases. e+=+amun+ vv. '21:. um. Jam-mm 4-5:. tannu “F 4-5:. Jnnuuwmr- 1+2. “Mine. “m. 1m“ amt +1”. wannr- “1.”. at: +1”. inwau+mnn+ Jam-mam. I uvuuumusnv a.a.a.| A.th rid—HUHALII luLnu m. u“. ULufiJLHLJ manual and find—3L“. wanna. uuu rLUHUALV “snug m. m. mmou all.” you“. no...“ “1qu,- Done @lnternet In v (1110096 : {- Test 1 -Windows Internet Explorer Oll) calculating the future value of present cash flows. (0B) calculating the present value of future cash flows. QC) ls necessary in order to pull present values to the future. 00) none ofthe above Points Earned: 1.0/1.0 Correct Answerls): B 3‘ 24. What is the future value of cash flows 1-5 at the end of year 5, assuming a 6% interest rate [compounded annually)? End of year Cash flow 1 $2,500 2 3,000 3 1,250 4 3,500 5 1,250 6 4,530 7 2,350 on 13,879.36 03) $13,093.74 QC) $9,780.40 OD) $11,543.43 Points Earned: 0.0/1.0 Correct Answerls): B y 25. Which of the following statements are TRUE? Statement I: As you increase the interest rate, the future value of an investment increases. Statement II: .05 you increase the length of the investment (to receive some lump sum), the present value of the investment increases. Statement III: The present value of an ordinary annuity is larger than the present value of an annuity due. (all else equal) @111 Statement] only OB) Statements I and ll 0 C) Statement 11 only 00) Statements I and 111 only Points Earned: 1.0/1.0 Correct Answerls): A < | Conlmue Done Olnternet 0‘9 v QIUUg’D . ...
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This note was uploaded on 04/08/2011 for the course MGMT 3123 taught by Professor Saffarian during the Spring '11 term at Rogers State.

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Test 1 - x 1. Managers of firms should only take actions...

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