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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 pretax 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 aftertax 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 daytoday 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 longterm 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 assettoequty 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) Debtequity ratio
@D) Priceearnings 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?
011) 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 shortterm 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 15 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. Jammm 45:. tannu “F 45:. Jnnuuwmr 1+2. “Mine. “m. 1m“ amt +1”. wannr “1.”. at: +1”. inwau+mnn+ Jammam. 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 15 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.
 Spring '11
 saffarian

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