Question Which of the following is least related to the valuation of a firm's stock?
Answer
A. market share
B. amount of cashflows
C. timing on cash flows
D. risk associated with cash flows
Incorrect
Market share is least related. From Chapter 1 and lectu
Question Which of the following is least related to the valuation of a firm's stock?
Answer
A. market share
B. amount of cashflows
C. timing on cash flows
D. risk associated with cash flows
Correct
Market share is least related. From Chapter 1 and lecture
You have the following information on Els Putters, Inc.: sales to working capital is 4.4 times, profit margin is 20 percent, net
income available to common stockholders is $4.60 million, and current liabilities are $5.8 million.
What is the firms balance
Oakdale Fashions, Inc., had $245,000 in 2012 taxable income. Using the tax schedule in
Table 2.3.
calculate the companys 2012 income taxes.
Income taxes
$ 78,800
What is the average tax rate? (Round your answer to 2 decimal places.)
Average tax rate
32.16
Chapter 2, Solutions
Cornett, Adair, and Nofsinger
CHAPTER 2 REVIEWING FINANCIAL STATEMENTS
Questions
LG1
1. List and describe the four major financial statements.
The four basic financial statements are:
1. The balance sheet reports a firms assets, liabi
Quiz Two Questions
Question I now have $20,000 in the bank earning 5% per year.
(My bank is lame and only pays
interest annually.) I can add $1000 each year starting a year from today. How long will it take to accumulate
the $30,000 I need to make a down
Liquidity Ratios Brendas Bar and Grill has current liabilities of $27 million. Cash makes up 10 percent of the current
assets and accounts receivable makes up another 39 percent of current assets. Brendas current ratio is 2.7 times. What
is the book value
The top part of Ramakrishnan, Inc.s, 2012 and 2011 balance sheets is listed below (in millions of dollars).
2012
2012
Current
assets:
Cash
and
marketable
securities
$
34
Account
s receivable
25
143
$
128
206
Inventor
y
Total
$
187
383
$
340
Curren
t
liabi
If the present value of an ordinary, 6-year annuity is $8,500 and interest rates are 9.5 percent, whats the present value of the sam
due? (Round your answer to 2 decimal places.)
Present value
$ 9,307.50
A loan is offered with monthly payments and a 10 pe
Exam Two Homework: 5a, 5b, 6, 7a, and
7b.
Compute the future value in year 7 of a $2,000 deposit in year 1 and another $2,500 deposit at the end of year 4 using an
8 percent interest rate.
Future Value
$ 6,323.03
What is the future value of a $900 annuity
Chapter 7, Solutions
Cornett, Adair, and Nofsinger
CHAPTER 8 Valuing Stocks
Questions
LG1
1. As owners, what rights and advantages do shareholders obtain?
They are able to participate in the economic growth of publicly traded firms without
having to manag
Chapter 13, Solutions
Cornett, Adair, and Nofsinger
CHAPTER 13 - WEIGHING NET PRESENT VALUE AND OTHER CAPITAL
BUDGETING CRITERIA
Questions
LG1
1.
Is the set of cash flows depicted below normal or non-normal? Explain.
Time
Cash
Flow
0
1
2
3
4
5
-$100 -$50
Call Premium A bond indenture agreement includes both a call provision and a call premium. The purpose of this call
premium is to:
compensate a bondholder for his or her bond being called.
Coupon Rate A bond pays $32.50 every six months in interest. What
Chapter 4
Time Value of Money 1:
Analyzing Single Cash Flows
1.
2.
3.
Future Value of a Lump Sum
Present Value of a Lump Sum
Rule of 72
Future Value - Compounding
Future Value - What is something worth in the future at a rate of interest.
ex.
$1,000 today
Multiple Choice
Modify Remove
Question The
intercept of the Prospect Theory graph is called a(n)
_ and reflects the behavioral characteristic of
_?
Answer
A.
Correct Feedback
Incorrect Feedback
Reference point, anchoring
B. Outcome, gains
C. Emotion point
Future Value Multiple Cash Flows Two years ago, you started a savings account with a $1,000 deposit. Today, you added another
$1,000. What will your account be worth two years from today if you earn 5.0 percent annual interest?
$2,318.01
Explanation:
FV =
Question I now have $20,000 in the bank earning 5% per year. (My bank is lame and only pays interest
annually.) I can add $1000 each year starting a year from today. How long will it take to accumulate the
$30,000 I need to make a down payment on a house?
Question Otis Day manufactures and sells men's suits. Each suit sells for $800. Fixed costs are $200,000
and variable costs are are $250 per suit. Assume no taxes and no depreciation. Which is the closest
number of suits needed to be sold to break even?
A
Question Calculate the firm's expected return on assets if its expected return on debt is 10%, expected
return on equity is 20%, and its WACC is 14%
Answer
A. 14%
B. 15%
C. 16%
D. Can't be calculated
Correct Feedback
No calculations needed. WACC = expecte
Exam Four Example Problems
Chapter 8a Homework
1. On October 9, 2007, the Dow Jones Industrial Average set a new high. The index closed at 14,164.53, which was up
120.80 that day.
What was the return (in percent) of the stock market that day? (Round your
C hapter 3
Analyzing Financial Statement
Five major areas to analyze.
(1)
(2)
(3)
(4)
(5)
Liquidity Position
Management of Assets
Management of Debt
Company's Profitability
Market's View of Company
(1)
Liquidity Ratios - use to investigate the relationshi
Chapter 3, Solutions
Cornett, Adair, and Nofsinger
CHAPTER 3 ANALYZING FINANCIAL STATEMENTS
Questions
LG1-LG5
1. Classify each of the following ratios according to a ratio category (liquidity ratio, asset
management ratio, debt management ratio, profitabi
1. Present Value What is the present value of a $500 payment made in 4 years when the discount
rate is 8 percent?
A. $365.35
C. $460.00
B. $367.51
D. $680.24
E.
F. 2. Future Value of an Annuity What is the future value of an $800 annuity payment over 15
y
Chapter 7, Solutions
Cornett, Adair, and Nofsinger
CHAPTER 7 Valuing Stocks
Questions
LG1
1. As owners, what rights and advantages do shareholders obtain?
They are able to participate in the economic growth of publicly traded firms without
having to manag
Chapter 5, Solutions
Cornett, Adair, and Nofsinger
CHAPTER 5 Time Value of Money 2: ANALYZING ANNUITY CASH FLOWS
Questions
LG1
5-1 How can you add a cash flow in year two and a cash flow in year four in year seven?
To add cash flows, they need to be moved
Chapter 6, Solutions
Cornett, Adair, and Nofsinger
CHAPTER 6 Valuing Bonds
Questions
LG1 1. What does a call provision allow the issuer to do, and why would they do it?
A call provision on a bond issue allows the issuer to pay off the bond debt early at a