1- (6 points) XYZ Inc. has gathered projected cash flows for a potential project. The
required rate of return for the project is 12%. Using the IRR decision rule, should the firm
accept the project? Why? Using the payback period decision rule, shou
1- (5 points) Suppose a firm is expected to increase dividends by 20% in year 1, by 15% in
year 2 and by 10% in year 3. After that, dividends will increase at a rate of 5% per year
indefinitely. If the last dividend that was just paid was $1.5 and
1- (6 points)
Calculate the total tax bill, average tax rate and marginal tax rate for an Ontario resident whose
regular income was $140,000 in 2009.
Federal Tax Rates
Ontario Tax Rates
$ 0 37,178
It is March 1, 2013. A firm expects sales over the next 4 months to be as follows:
Sales in January and February were $100,000 and $120,000 respectively. Twenty five
Chapter 24 Sample Questions
1- The implicit exchange rate between currencies found from explicit exchange rates quoted in
some third currency is called a(n)_ .
A) open exchange rate
C) backward rate
D) forward rate
E) interest rate
2- The pr
Chapter 19 Problems
1- Given the following information: sales = $450; costs = $400; tax rate = 34%.
Assuming costs run at a constant percentage of sales, if sales rise by 10% next
year, what will net income be? ($36.3)
2- A firm earns net income of $25,00
Sample Questions for Ch. 4
1- A _ standardizes items on the income statement and balance sheet as a
percentage of total sales and total assets, respectively.
tax reconciliation statement
statement of standardization
statement of changes in financ
Chapter 4 Problems
COOGAN DEVELOPMENT CO., INC.
2006 Income Statement
Cost of Goods Sold
Earnings before interest and taxes
1- McGwire Factory Inc. has current assets of $3,000, net fixed assets of $8,000,
current liabilities of $1,300, and long-term debt of $5,000. What is the value of
the shareholders equity account for this firm? How much is net working c
Sample Questions (Ch 1 & 2)
1- Suppliers, customers, and employees of a corporation are called:
2- A proprietorship is:
A business formed by two or more individuals.
Chapter 7 Sample Questions
1- The stock valuation model that determines the current stock price as the next dividend divided
by the (discount rate less the dividend growth rate) is called the:
A) Zero growth model.
B) Dividend growth model.
C) Capital Ass
Sample Questions (Ch. 6)
1- The form of bond issue in which the bond is issued without record of the owner's name, with
relevant payments made directly to whomever physically holds the bond, is called:
A) New-issue form.
B) Registered form.
C) Bearer form
Sample Questions Ch 20
1- Which of the following would NOT fall under the heading of short-term financial planning?
A firm is considering increasing inventory to increase responsiveness to its
A firm is considering steps to shorten its col
Sample Questions for Ch. 19
1- Because Jerry's Ice Cream is currently producing at less than full capacity, the pro-forma for
next year should project:
A decrease in sales.
A net loss.
A decrease in net working capital.
Fixed assets growing sl
Sample Questions Ch 8
1- The process of valuing an investment by determining the present value of its future cash flows
is called (the):
Constant dividend growth model.
Discounted cash flow valuation.
Average accounting valuation.
Chapter 7 Problems
1- Garage Inc., is expected to maintain a constant 6% growth rate in its dividends,
indefinitely. If the company has a dividend yield of 5.4%, what is the required rate
of return on the companys stock? (11.4%)
2- DMX Corp. pays a consta
Sample Questions (Ch. 5)
1- Tom and Antonio both want to open savings accounts today. Tom wants to have $1,000 in his
savings account six years from now. Antonio wants to have $1,000 in his savings account
three years from now. Which of the following stat
Sample Questions (Ch 3)
1- Which of the following accounts is (are) included in cash flow from assets?
I. Rent expense
II. Interest expense
III. Accounts receivable
I and II only
III and IV only
I, II, and III only
I, III, and IV
Chapter 6 Problems
6- Timmons Inc. has 9% coupon bonds on the market with 12 years left to maturity. The
bonds make annual payments. If the YTM on these bonds is 8%, what is the current bond
7- Merton Enterprises has bonds on the mar
1- (7 points) Strapped for cash, your friend makes you the following offer. He would like to
borrow $25,000 today. He will repay the $25,000 by making yearly payments with the
first payment being for $1,750 at the end of this year. The payments wil
Growing Annuity Problems
1- Strapped for cash, your neighbour makes you the following offer. He would like to
borrow $15,000 today. He will repay the $15,000 by making yearly payments with the
first payment being for $1,200 at the end of this year. The pa
1- (6 points) Bond J is a 15% coupon bond. Bond S is a 12% coupon bond. Both bonds
have 10 years to maturity, make payments every 45 days, and have YTM of 13%. If
interest rates suddenly rise by 1%, what is the percentage price change of these bond
1- (5 points) Given the following information for ABC Co., calculate the interest expense:
sales = $26,750; cost of goods sold = $18,700; depreciation expense = $1,670; dividends
paid = $690; addition to retained earnings is double the amount of th
1- (5 points) After successfully completing your 0472-270 class, you feel that the next
challenge ahead is to serve on the board of directors of Kenny Enterprises. Unfortunately
you will be the only individual voting for you. If Kenny has 200,000 s
Selected items from Isis Companys balance sheets for the beginning and ending ofthe
year, and income statement for the year are shown below. Use this information to solve
Questions I and 2.
BALANCE SHEET ITEM Beginning Ending Average
Inventory $600 $70
SAMPLE MIDTERM QUESTIONS FROM CHAPTER 04.
Please note there will also be questions from the podcast and the video series.
What is the luture value of $ 10,000 on deposit for five years at 6 percent simple interest?
B) $ 10,30
' . how much will you have in one year?
If you need $2,009 in one ,
osit today? ($12,038.00, $10,873.53)
2. F or each of the foliowing, compute the xture vaiue:
Years Interest Rate Future Value
3 2,250 4 18%
76,355 15 12
,. 1. What is the payback period for the following set of cash ows? (2.78 years)
4 r 300
2. Offshore Drilling Products, Inc. imposes a payback cutoff of three years for its
international investment projects. If the
Assets = Liabilities + Stockholders Equity
NWC = CA CL
Net Income = Dividends + Addition to Retained Earnings
EPS = NI / # of shares outstanding
DPS = Dividends / # of shares outstanding
Cash Flow From Assets (CFFA) = Cash Flow to