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FINANCE 511 Mideterm Exam0

# FINANCE 511 Mideterm Exam0 - FINANCE 511 MIDTERM...

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FINANCE 511 MIDTERM EXAMINATION SUMMER 2010 INSTRUCTIONS : This exam is comprised of one discussion question, two work problems, 10 True/False questions and 10 multiple choice questions. You must answer the discussion question, all multiple choice questions and all true/false questions. You must choose one of the two work problems to solve. If you choose both, only the first problem will be graded. This is an open book, open notes examination. Calculators are allowed but no computers or cell phones should be operating during the examination period. Students may not share notes or other resources. Please show all work and state any assumptions you make when working a problem. Partial credit is generous when I can see the logic of your approach. Please refrain from allowing your eyes to wander during the course of the exam. Cheating is prohibited and failure to comply with this policy may result in your dismissal from the University. Good Luck!

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FINANCE 511 MIDTERM EXAMINATION SUMMER 2010 Discussion Question [30 points] 1. Explain how security analysis and capital market theory are indirectly linked.
FINANCE 511 MIDTERM EXAMINATION SUMMER 2010 Problem 1: 30 points The following data is for BMI, Inc.: 2009 2010 Current assets \$ 863 \$ 896 Current liabilities 710 818 Debt in current liabilities 1 39 Long term debt 506 408 Total Assets 2,293 2,307 Capital expenditures 111 117 Change in deferred taxes (29) (20) Sales 4,056 4,192 Operating Expenses 3,307 3,408 General expenses 562 528 Depreciation 139 136 Investment income 5 6 Interest Expense 39 30 Miscellaneous income (net before taxes) (25) ( 4) Income taxes ( 7) 41 Marginal tax rate 64% 45% a. Compute invested capital (15 points) 2009 2010 Invested Capital Statement Working Capital Long term Assets _____ _____ Operating invested capital ===== ===== Debt Equity

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FINANCE 511
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