MBA800X22 - _ PleasePrintName MBA800 ExamII Summer2005...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
_____________________________ Please Print Name            MBA 800 Exam II Summer 2005 Instructions: 1. Read each question carefully and answer fully.     All firms use a  calendar year.  Not all parts of each problem are equally weighted. 2. Problems (other than multiple choice) not supported by relevant and  readable computations are subject to point loss.  Where appropriate,  terms like   A net income, @   A net loss, @   etc. must be included with  number answers. 3. Budget your time carefully.  It is generally better to finish half of each  problem than to complete all of half the problems.   Students who  continue to work on exams after instructed to stop will receive a zero  on this exam. 4. It is the student's responsibility to verify that all the listed problems  and   pages   are   contained   is   this   booklet.     Unanswered   questions  receive zero points regardless of reason. Problem Pages Approximate Points Approximate Time I 2-3 23 13 – 18 minutes II 4 15 9 – 12 minutes III 4 12 8 – 10 minutes IV 5-10 90 53 – 68 minutes
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Bubble  Sheet After 10 Total 140 83 - 108 minutes 2
Background image of page 2
Problem I The Jensen Company had the following balance sheet on 1 Jan 2005: Cash $7810 Common Stock $7810     Total Assets $7810 $7810 An asset exists that has a 50% of paying $6,000 and a 50% chance of paying $3,000 on 31  Dec 2005.  There will also be a final payment on 31 Dec 2006 of either $6,000 or $3,000.  If  earnings are high in 2005, there is a 1/3 chance of high earnings in 2006.  If earnings are  low in 2005, there is a 1/3 chance of low earnings in 2006.  The interest rate is 10%. REQUIRED:  Answer each part A through H.  Round to nearest dollar for dollar answers. A.  Jensen purchased the asset for its economic value on 1 Jan 2005.  Prove that Jensen  will have no cash after the investment is purchased. B.  Assume Jensen properly uses a mark-to-market approach for this asset, and earnings  are “low” in 2005.  Show the 31 Dec 2005 balance sheet after all transactions are recorded. 3
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
C.  What are the abnormal earnings in dollars and  percentage from B? 4
Background image of page 4
Problem I  (continued) D.  Assume GAAP dictates the asset’s cost should be amortized evenly over its life, and  earnings are “low” in 2005.  Show the 31 Dec 2005 balance sheet after all transactions are  recorded. E.  What is Jensen’s market-to-book ratio from D?
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/28/2011 for the course MBA 800 taught by Professor Wallin during the Summer '11 term at Ohio State.

Page1 / 16

MBA800X22 - _ PleasePrintName MBA800 ExamII Summer2005...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online