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Exam1 FIN470 Spring 2009 Key

# Exam1 FIN470 Spring 2009 Key - Exam1 FIN470 Spring 2009 Key...

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Exam1 FIN470 Spring 2009 Key 1. A bond which is issued without recording of the owner's name and for which payments are made to whomever has physical possession of the bond is said to be in: A. registered form. B. bearer form. C. collateral status. D. new-issue condition. E. debenture status. Ross - Chapter 007 #9 SECTION: 7.2 TOPIC: BEARER FORM TYPE: DEFINITIONS 2. Your _____ tax rate is the amount of tax payable on the next taxable dollar you earn. Ross - Chapter 002 #9 SECTION: 2.3 TOPIC: MARGINAL TAX RATES TYPE: DEFINITIONS 3. Frank invests \$2,500 in an account that pays 6 percent simple interest. How much money will he have at the end of four years? Ending value = \$2,500 + (\$2,500 .06 4) = \$3,100.00 AACSB TOPIC: ANALYTIC Ross - Chapter 005 #16 SECTION: 5.1 TOPIC: SIMPLE INTEREST TYPE: PROBLEMS

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4. The Smith Co., which is currently operating at full capacity, has sales of \$3,000, current assets of \$800, current liabilities of \$400, net fixed assets of \$1,900, and a 6 percent profit margin. The firm has no long-term debt and does not plan on acquiring any. The firm does not pay any dividends. Sales are expected to increase by 9 percent next year. If all assets, liabilities, and costs vary directly with sales, how much additional equity financing is required for next year? Projected assets = (\$800 + \$1,900) 1.09 = \$2,943 Projected liabilities = \$400 1.09 = \$436 Current equity = \$800 + \$1,900 \$400 = \$2,300 Projected increase in retained earnings = \$3,000 .06 1.09 = \$196.20 Equity funding need = \$2,943 \$436 \$2,300 \$196.20 = \$10.80 AACSB TOPIC: ANALYTIC Ross - Chapter 004 #45 SECTION: 4.2 TOPIC: PRO FORMA STATEMENTS TYPE: PROBLEMS 5. Which one of the following statements concerning the annual percentage rate is correct? A. The effective annual rate is lower than the annual percentage rate when an interest rate is compounded quarterly. B. When firms advertise the annual percentage rate they are violating U.S. truth-in-lending laws. C. The annual percentage rate considers interest on interest. D. The rate of interest you actually pay on a loan is called the annual percentage rate. E. The annual percentage rate equals the effective annual rate when the rate on an account is designated as simple interest. Ross - Chapter 006 #17 SECTION: 6.3 TOPIC: ANNUAL PERCENTAGE RATE TYPE: CONCEPTS 6. A loan where the borrower pays interest each period, and repays some or all of the principal of the loan over time is called a(n) _____ loan. Ross - Chapter 006 #11 SECTION: 6.4 TOPIC: AMORTIZED LOAN TYPE: DEFINITIONS

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Exam1 FIN470 Spring 2009 Key - Exam1 FIN470 Spring 2009 Key...

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