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Fin Midterm 1

Fin Midterm 1 - FIN3716 Fall 2010 MIDTERM 1 SOLUTION Name...

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FIN3716- Fall 2010 MIDTERM 1 SOLUTION Name ________________________________________________ Section____________ Time: 75 Min Total Point: 70 Work on this exam is to be yours alone. Any discussion of either the questions or your answers with anyone other than your instructor will be considered as cheating and, thus, as a violation of the LSU honor code. For Multiple Choice questions, circle the letter/s of the correct multiple-choice answer. You have to show your work to receive partial credit ( if applicable and when possible ) for the answer. Your answers must be COMPREHENSIBLE and your work “ CLEAN ”. Multiple Choice Questions (Each question 4 points) 1. Which of the following are advantages of the corporate form of business ownership? I. limited liability for firm debt II. double taxation III. ability to raise capital IV. unlimited life A. I and II only B. III and IV only C. I, III, and IV only D. II, III, and IV only E. I, II, III, and IV 2. Which one of the following best states the primary goal of financial management? 3. Which of the following represent cash outflows from a corporation? I. issuance of common shares II. payment of dividends III. new loan proceeds IV. payment of government taxes
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4. Sally and Alicia currently are general partners in a business located in Atlanta, Georgia. They are content with their current tax situation but are both very uncomfortable with the unlimited liability to which they are each subjected. Which form of business entity should they consider to
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