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financequiz3

# financequiz3 - 1 Question Shop-Til-You-Drop Inc recently...

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1. Question: Shop-Til-You-Drop Inc. recently reported net income of \$5.2 million and depreciation of \$600,000. What is was net cash flow? Assume it has no amortization expense.

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Your Answer: \$5,40 0,000 \$5,60 0,000 \$5,80 0,000 C ORR ECT \$6,00 0,000 \$6,20 0,000
Instructor Explanation: Instructor Exp: Net Income + non cash charges = Cash Flow …. Depreciation is a non-cash charge: \$5,200,000 + 600,000 = \$5,800,000 Points Received: 4 of 4 Comments: 2. Question: Superior Medical System's 2005 balance sheet showed total common equity of \$2,050,000. The company had 100,000 shares of stock outstanding which sold at a price of \$57.25 per share. By how much did the firm's market value and book value per share differ?

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Your Answer: \$36.7 5 C ORR ECT \$38.2 5 \$39.5 0 \$40.2 5 \$51.0 0
Instructor Explanation: Balance sheet: market value vs. book value Shares Outstanding 100,000 Price per share \$57.25 Total common equity \$2,050,000 Book value per share \$20.50 Difference between book and market value \$36.75 Points Received: 4 of 4 Comments: 3. Question: Madison Metals recently reported \$9,000 of sales, \$6,000 of operating costs other than depreciation, and \$1,500 of depreciation. The company had no amortization charges and no non-operating income. It had issued \$4,000 of bonds that carry a 7%

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financequiz3 - 1 Question Shop-Til-You-Drop Inc recently...

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