FIN 36053Nonna Sorokina
Chapter 13 Homework
Webmasters.com has developed a powerful new server that would be used for
corporations Internet activities. It would cost $10 million at Year 0 to buy the
equipment necessary to manufacture the
1. Which of the following will increase the future value of a lump sum investment?
I. Decreasing the interest rate
II. Increasing the interest rate
III. Increasing the time period
IV. Decreasing the amount of the lump sum investment.
II and III
1.Titan Football Manufacturing had the following operating results for 2010: sales = $19,780;
cost of goods sold = $13,980; depreciation expense = $2,370; interest expense = $345;
dividends paid = $550. At the beginning of the year, net fixed a
Practice Quiz 2
FIN 36053 Instructor N. Schenck
(Note that this list includes sample questions only and does not cover all topics that will be
included in Quiz 2 (Ch. 5, 6, 7)
Which one of the following types of loans requires multiple loan
Chapter 3Financial Markets, Instruments, and Market Makers
1. Financial markets provide the process of connecting buyers and sellers of financial claims.
3. Stocks and Bonds are long-term securities traded in the money market.
1.Imprudential, Inc., has an unfunded pension liability of $750 million that must be paid in 25
years. To assess the value of the firms stock, financial analysts want to discount this liability
back to the present.
If the relevant discount rate
1.The SGS Co. had $275,000 in taxable income
Calculate the companys income taxes.
Income taxes $ 90,500
we can see the marginal tax schedule. The first $50,000 of income is taxed at 15 percent, the
next $25,000 is taxed at 25 percent, the next
Dr. Sudhakar Raju
ASSIGNMENT QUESTIONS TO CHAPTER 5 (DCF VALUATION)
1. Ancelet Co. has identified an investment project with the following cash flows. If the discount
rate is 10 percent, what is the present value of these cash flows? What is the p
1.Assume Mudvayne, Inc., has a 6.3 percent ROA and a 19 percent payout ratio.
What is the internal growth rate?
Internal growth rate
2.Assume the Crash Davis Driving School has a 13.5 percent ROE and a 34 percent payout
What is the
A stock has paid dividends of $1.80, $1.85, $2.00, $2.20, and $2.25
over the past five years, respectively. What is the average capital
Donuts Delite just paid an annual
The dividend yield is defined as:
Nexts expected cash dividend divided by the current book value per
The current annual cash dividend divided by the current market
price per share.
Nexts expected cash dividend divided by the current market pric
Which account should you use based upon the annual percentage rates
quoted by each bank?
Account A 3.75% compounded annually
Account B 3.70% compounded monthly
Account C 3.70% compounded semi-annually
Account D 3.65% compounded continuously
Account E 3.66
Today you earn a salary of $28,500. What will be your annual salary fifteen
years from now if you earn annual raises of 3.5%?
Forty years ago, your father invested $2,500. Today that investment is
2. Explain in what situation it would be useful to recognize revenue as the
productive activity takes place.
3. At what times, other than those included in (1) and (2) above, may it be
appropriate to recognize revenue?
Heres the SOLUTION
Judgment Case 4-3
Each of the following situations occurred during 2011 for one of your audit
1. The write-off of inventory due to obsolescence.
2. Discovery that depreciation expenses were omitted by accident from
2010s income statement.
3. The useful lives of al
The following summary transactions occurred during 2011 for Bluebonnet
Cash Received from:
Interest on note receivable 6,000
Principal on note receivable 30,000
Sale of investments 50,000
Proceeds from note payable 100,000
Posted on December 17, 2013 by winged_envoy
E4-19 Statement of cash flows directly from transactions
The following transactions occurred during March 2011 for the Wainwright
Corporation. The company owns and operates a wholesale warehouse.
[These are the
Jeff deposits $3,000 into an account which pays 2.5 percent interest,
compounded annually. At the same time, Kurt deposits $3,000 into
an account paying 5 percent interest, compounded annually. At the
end of three years:
a. Kurt will have twice the mo
Given the following partial stock quote, what is the amount of the
next annual dividend if yesterdays closing price was $32.60?
Stock Div Yld% PE ratio Close price Net change
Clear water 3.4% 12 ? .12
1. invest less than 5k with goal of receiving 5k back sometime in the future. A:
the period of time she has to wait decreases as the amt she invests today
2. invested $5k 20 years ago with u=insurance company. Paid him 5% siple
Cross over point
1) find CF difference
2) find IRR of the difference on financial calculator
*IRR Answer is cross over point
CF with a project- CF without the project
# 16 test 3- one or two questions on final
given income statement what i
Affects Operating risk of a business - Business risk
Known as Financial Leverage
Magnifies the upside and downside of returns
Lenders get paid before shareholders.
Change in operating income has greater effect on
ACCT 33004 Introduction to Accounting Systems
Romney & Steinbart
Prepare flowcharting segments for each of the following operations:
processing transactions stored on magnetic tape to update a master
file stored on magnetic tape
A firm will not pay dividends for t
of $15 per share 10 years from today and will incre
year thereafter. If the required return on this stock is 14%,
8+ I'- Dc-lermn'ne dividends +hrou3h
3E cons+am+. 3:0 wrln. u
0 l q. 0 579
o o o 415 15.15
Non-constant Dividend Growth
Valuing NCDG Stocks
Step 1: Figure out all dividends through the first year of constant
growth. Draw them on a timeline.
Step 2: Compute the price of the stock at the point when the
constant growth r
In class quizzes 3*25pts
Best answer to finance questionIt depends!
Everything is a real estate
Investment and financing decisions
Capital budgetingdecision to invest in tangible and intangible
1. Future valueamount to which an investment will grow after earning interest
2. Compound interestinterest earned on interest
3. Simple interestinterest earned only on the original investment
Ex: interest earned at a rate of 6% for 5 years on a princ
Kent State Finance 36053 Quiz 2 due on Oct. 6 before class
Finance 36053 Section 5
2 pts each, 1 pt for
Potential pts = 25
Read each question carefully. Place the correct an
1. A mortgage of $80,000 at 3.99% over 30 years.
a. What is the monthly payment amount?
PV=800000, I=3.99/12, N=30*12=360[PMT=381.27]
b. What is the total of all payments over the entire 30
c. How much interest will you pay over
Investment vs. financing
Financingborrowed $ or equity
Business typeSole prop, partnerships, corporations, LLC
Limited liabilitycorporations and LLC
Corporationowned by shareholders, they elect board. Board appoints
management, double taxation