Chapter 3
FINC 322
Answers to Concepts Review and Critical Thinking Questions
1.
a. If inventory is purchased with cash, then there is no change in the current ratio. If inventory is
purchased on credit, then there is a decrease in the current ratio if it
FINC 322
Practice Problems for Exam 1
1. A firm has a debtequity ratio of 0.42. What is the total debt ratio?
A. 0.30, B. 0.36,
C. 0.44,
D. 1.58,
E. 2.38
2. Reliable Cars has sales of $807,200, total assets of $1,105,100, and a profit margin of 9.68 perc
Practice Problems on Financial Ratios
FINC 322 Financial Management 1
* If you find any wrong answer, please let me know.
1. A firm has a debt to equity ratio of 50%, debt of $300,000, and net income of $90,000. The
return on equity is
A) 60%
B) 15%
C) 30
FINC 322
Practice problems for Exam 3
(Bond and Stock Valuation)
True/False Questions
1. The valuation of a financial asset is based on the concept of determining the present value of future cash
flows.
Answer: True Difficulty: Easy Type: Conceptual
2. Th
FINC 322 Financial Management 1
Formulas for TVM, Bond and Stock Pricing, and Capital Budgeting (C. Lee)
Chapter 5: Single CF TVM
Unknown
Discrete Compounding
of Interest
FV = amount
PV = principal
i = the rate over compounding period ()
r = nominal annua
FINC 322 Financial Management 1
Fall 2008
Exam 1
This is an old exam that is based on a different textbook. Please refer to this
sample exam for the structure of the exam in this course only. Dont try to solve
these problems.
VERSION 1
Name
Student No.
Cl
[Date]
Financial Analysis Report
Khoa Ngo
FINC 322 10/28/2015
1
Section 1: Business Analysis
History and Development:
An interesting fact about Bank of America is the original former of the bank, Amadeo Peter
Giannini, was an Italian immigrant. Therefore,
Bank of America
Corp  BAC
Financial
BAC
Strength
Quick
Ratio
(MRQ)
Current
Ratio
(MRQ)
LT Debt to
Equity
(MRQ)
Total Debt
to Capital
(MRQ(
Return on
Equity
Return on
Assets
Return on
Invested
Capital
Compare to Industry
Compare to S&P 500
S&P
500

Indus
P8
a/ Original Issue
Jan 1, 2013
Cash
Discount on B/P
B/P
$385,279,91
$14,720.09
$400,000
b/ New Issue
Jan 1, 2013
Cash ($450,000 x 102%)
Premium on B/P
B/P
$459,000
$9000
$400,000
c/ Recall of the old Issue
Loss from redemption = 391,575.38 (400,000 x 1
P 14
1/ Total amount payable before restructuring = $2,400,000 + $34,031.82 = $2,434,031.82
Total amount after restructuring = New face value + interest in 4 years 8%
= $2,200,000 + (2,200,000 x 4 x 8%) = $2,904,000
The implicit interest rate calculated i
FINC 322
Financial Management 1
Homework #1 (Time Value of Money)
Show all your work.
This is due November 8th 2011 in class (Tuesday)
You can do this homework alone or form a team of up to 4 students; but no more than 4
students in each team. When you
FINC 322 Financial Management 1
Fall 2011
Comprehensive Makeup Exam (CME)
You should let me know via email by Friday (December 9th) before the
final exam week if you plan to take it.
CME will cover the topics of exams 2 through 4 (exam 1 topics are
drop
FINC 322 Financial Management 1
Fall 2011
EXAM 5 (Takehome)
1:30pm or 3:00pm
Circle your class time
Name
Work alone. This means that you are discouraged to consult other students explicitly for
answers. However, you may discuss about general concepts.
Th
FINC 322 Chapter 1 supplementary note
Forms of Organizations
Corporation
Advantages
1. limited liability for the owner(s)
2 easy transferability and sharing of
ownership
3. potentially infinite life(at least it
might surpass the owners lifespan)
4. easie
FINC 322 Financial Management 1
Chapter 6 Supplementary Note 1
Continuous compounding
Rates are sometimes converted into the continuous compound interest rate equivalent because
the continuous equivalent is more convenient (for example, more easily differ
How to read stock quote on Finance Yahoo!
Last Trade: This is the last trade that happened on this stock (delayed 20 minutes)
Trade Time: This is the date or the time of the trade
Change: Amount the stock traded up or down in dollars and percentage
Prev.
FINC 322 Financial Management 1
Chapter 9 NET PRESENT VALUE AND OTHER INVESTMENT CRITERIA
Page 1 of 12
CHAPTER 9. NET PRESENT VALUE AND OTHER INVESTMENT CRITERIA
Capital budgeting concerns w hich projects to accept and which to reject . The
decision of wh
Understanding Price and Yield Information
There is a tremendous amount of information available on prices and yields of Treasuries from a
wide variety of sources. Local and national newspapers, cable TV stations, investment advisors
and a multitude of web
How to use TI BA II Plus
FINC 300, FINC 322, & FINC 454 (C. Lee)
When you have either single CF or multiple even CFs (annuity) over time, we use the following calculator
function:
Key Strokes
Meaning
2nd will choose yellow functions above each button.
n
Chapter 5 Answers:
Basic
1.
The simple interest per year is:
$5,000 .08 = $400
So after 10 years you will have:
$400 10 = $4,000 in interest.
The total balance will be $5,000 + 4,000 = $9,000
With compound interest we use the future value formula:
FV = PV
Basic
1.
To solve this problem, we must find the PV of each cash flow and add them. To find the PV of a
lump sum, we use:
PV = FV / (1 + r)t
PV@10% = $950 / 1.10 + $1,040 / 1.102 + $1,130 / 1.103 + $1,075 / 1.104 = $3,306.37
PV@18% = $950 / 1.18 + $1,040