BUS 530 Mid Term Exam Winter 2012

BUS 530 Mid Term Exam Winter 2012 - University of La Verne...

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Page 1 University of La Verne BUS 530 Financial Management Mid Term Examination January 31, 2012 Note: Please complete work in an Excel or Word file (only one file please). Make sure your name is in the file title. Your work is due in the Examinations folder of Blackboard on Sunday February 5, 2012 @ Midnight. Problem 1: Chapter 1 – Ownership and going public (5 points) Which of the following is NOT correct? a. When a corporation’s shares are owned by a few individuals and are not traded on public markets, we say that the firm is “closely, or privately, held.” b. “Going public” establishes a firm’s true intrinsic value, and it also insures that a highly liquid market will always exist for the firm’s shares. c. When stock in a closely held corporation is offered to the public for the first time, the transaction is called “going public,” and the market for such stock is called the new issue market. d. Publicly owned companies have shares owned by investors who are not associated with management, and public companies must register with and report to a regulatory agency such as the SEC. e. It is possible for a firm to go public and yet not raise any additional new capital at the time. Problem 2: Chapter 4 – FV of uneven CF stream (10 points) Tim Geithner plans to work for 12 years with his present employer and then start his own business. He plans to save and deposit $7,500 a year for the first 6 years and $15,000 annually for the following 6 years, with the first deposit being made a year from today. In addition, his grandfather just gave him a $25,000 gift which he will deposit immediately. If the account earns 9% compounded annually, how much will Mr. Geithner have when he begins his business 12 years from now?
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Page 2 Problem 3: Chapter 3 – Financial analysis (15 points) The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over. Balance Sheet (Millions of $)
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This note was uploaded on 02/27/2012 for the course BUS 510 taught by Professor Mehdi during the Spring '11 term at University of La Verne.

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BUS 530 Mid Term Exam Winter 2012 - University of La Verne...

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