Exam3 FIN370 A Key (2)

# Coats more just announced that it will commence

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36. Coats & More just announced that it will commence paying annual dividends next year. It plans to pay \$.75 a year for four years, \$.90 a year for the following three years, and then cease paying dividends altogether. How much is one share of this stock worth to you today if you require a 12 percent rate of return? a. \$5.89 B. \$3.65 c. \$4.09 d. \$3.34 e. \$4.40 BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 007 #67 SECTION: 7.1 TOPIC: UNEQUAL DIVIDENDS TYPE: PROBLEMS 37. A project has the following cash flows. What is the internal rate of return? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 008 #80 SECTION: 8.4 TOPIC: INTERNAL RATE OF RETURN TYPE: PROBLEMS 38. Thayer, Inc. has earnings before interest and taxes of \$10,350 and net income of \$2,528.50. The tax rate is 35 percent. What is the times interest earned ratio? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 003 #55 SECTION: 3.2 TOPIC: TIMES INTEREST EARNED RATIO TYPE: PROBLEMS

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39. A 5-year project is expected to generate revenues of \$92,000, variable costs of \$67,000, and fixed costs of \$11,000. The annual depreciation is \$4,000 and the tax rate is 35 percent. What is the annual operating cash flow? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 009 #58 SECTION: 9.3 TOPIC: OPERATING CASH FLOW TYPE: PROBLEMS 40. Company insiders cannot earn excess profits based on the knowledge they have related to their employer if the financial markets are: a. efficient at any level. b. aware that the trader is an insider. c. semistrong form efficient. D. strong form efficient. e. weak form efficient. BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 010 #42 SECTION: 10.6 TOPIC: EFFICIENT MARKETS TYPE: CONCEPTS 41. Huckster's is reviewing its current accounts to determine how a proposed project might affect the account balances. The firm estimates the project will initially require \$86,000 in current assets and \$69,000 in additional current liabilities. The firm also estimates the project will require an additional \$9,000 a year in current assets for each one of the five years of the project. How much net working capital will the firm recoup at the end of the project assuming that all net working capital can be recaptured? BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 009 #55 SECTION: 9.2 TOPIC: NET WORKING CAPITAL TYPE: PROBLEMS

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