Exam1A Answer Key Wed Class

Exam1A Answer Key Wed Class - t=0 t=1 t=2 t=3 FIN350-W...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
t = 0 t = 1 t=2 t=3 -150,000 100,000 150,000 200,000 FIN350-W Quiz 1 First Name_______ Last Name_______ Version A EFF= = ( + ) PV C 1 i n = iper inomm When using calculator, sometimes you might need to enter a negative number to get the answer. When there are several cash flows within a year, apply periodic rate. For HP calculator, after doing an operation to convert nominal rate to EFF, you might need to change to setting of P/YR back to 1. NOPAT = EBIT (1 – Tax rate) NOWC = Current assets - Non-interest bearing current liability Notes payable or short-term debt is not a non-interest bearing current liability. Total Operating capital = NOWC + Net Fixed Assets OCF = NOPAT + Depreciation expense FCF(free cash flow) = NOPAT – change in total operating capital EVA= NOPAT – (After tax cost of capital) * (total operating capital) 1. Which of the following factors may affect stock price? A. Projected (forecasted) cash flows to shareholders. B. The timing of cash flows. C. The riskness of the cash flows. D. All of above E. None of above. 2. Corporations have advantages over proprietorships and partnerships because of the __________. A. Tax free status B. Separation of ownership from management C. Unlimited liability D. Reduced reporting requirements E. Ability to raise large amount of capital 3. The decision regarding whether to issue new equity or issue debt to finance firm growth is called the __________ decision. A. Financing B. Working capital C. Capital Budgeting 1
Background image of page 1

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

View Full DocumentRight Arrow Icon
D. Efficient Market E. Capital Structure 4. 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 firm 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, and III only 5. One agency problem in a corporation is that shareholders may prefer to take ______ projects that may hurt bondholders.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/20/2011 for the course FIN 350 taught by Professor Chen during the Spring '07 term at S.F. State.

Page1 / 7

Exam1A Answer Key Wed Class - t=0 t=1 t=2 t=3 FIN350-W...

This preview shows document pages 1 - 3. Sign up to view the full document.

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