The Import Store has cash of $34,600 and accounts receivable of $54,200. The inventory cost
$92,300 and can be sold today for $146,900. The fixed assets were purchased at a cost of
$234,500 of which $87,900 has been depreciated. The fixed assets can be so
Lester's Fried Chick'n purchased its building 11 years ago at a cost of $139,000. The building is
currently valued at $179,000. The firm has other fixed assets that cost $66,000 and are currently
valued at $58,000. To date, the firm has recorded a total o
Last year, The Pizza Joint added $4,100 to retained earnings from sales of $93,600. The company
had costs of $74,400, dividends of $2,500, and interest paid of $1,400. The tax rate was 34
percent. What was the amount of the depreciation expense?
The December 31, 2009 balance sheet of Suzette's Market showed long-term debt of $638,100
and the December 31, 2010 balance sheet showed long-term debt of $574,600. The 2010 income
statement showed an interest expense of $42,300. What was the firm's cash
Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create
a business together renting surfboards, paddle boats, and inflatable devices in California. Will
and Bill will equally share in the decision making and in th
Which one of the following statements related to securities dealers is correct?
Dealers are limited to trading non-listed stocks.
Dealers operate exclusively in auction markets.
Dealers match buyers with sellers.
Dealers operate on a physical trading floo
Which one of the following situations is most apt to create an agency conflict?
Selling an underproducing segment of the firm
Giving all employees a bonus if a certain level of efficiency is maintained
Hiring an independent consultant to study the operati
Chapter 6 Practice Questions
#1 Which one of the following bonds represents the greatest interest rate risk?
10-year, zero-coupon bond
#2 A 9 percent, 4-year, semiannual coupon bond has a face value of $1,000. What is the current price of this bond if the
If you accept a job as a domestic security analyst for a brokerage firm, you are most likely
working in which one of the following financial areas?
The Veggie Hut has net income of $26,400, total equity of $102,700, and total assets of
$189,500. The dividend payout ratio is 0.30. What is the internal growth rate?
Internal growth rate
Valentino's maintains a constant debt-equity ratio of 0.45. The firm had net income of $11,800
for the year and paid $6,500 in dividends. The firm has total assets of $92,000. What is the
sustainable growth rate?
Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300,
and owners' equity of $21,100. What is the value of the net working capital?
Net working capital = $21,100 + $8,600 - $
Daniel's Market has sales of $36,600, costs of $28,400, depreciation expense of $3,100, and
interest expense of $1,500. If the tax rate is 34 percent, what is the operating cash flow, OCF?
EBIT = $36,600 - $28,400 - $3,1
The tax rates are as shown.
What is the average tax rate for a firm with taxable income of $128,013?
Taxes paid = 0.15($50,00
A firm has total debt of $1,460 and a debt-equity ratio of 0.31. What is the value of the total
$1,460 / Total equity = 0.31; Total equity = $4,709.68
Total assets = $1,460 + $4,709.68 = $6,169.68
Mario's Home Systems has sales of $2,710, costs of goods sold of $2,050, inventory of $482,
and accounts receivable of $419. How many days, on average, does it take Mario's to sell its
1. Which one of the following indicates that a firm has generated sufficient internal cash flow to finance its entire
operations for the period?
Negative cash flow to creditors
Positive cash flow from assets
Positive operating cash flow
Positive cash flow
Able Co. has $218,000 in taxable income and Bravo Co. has $5,600,000 in taxable income.
Suppose both firms have identified a new project that will increase taxable income by $12,000.
The additional project will increase Able Co.'s taxes by _ and Bravo Co.
Which one of the following applies to a general partnership?
The profits of a general partnership are taxed the same as those of a corporation.
The profits of the firm are taxed as a separate entity.
Each partner's liability for the firm's debts is limite
Peterboro Supply has a current accounts receivable balance of $391,648. Credit sales for the year
just ended were $5,338,411. How long did it take on average for credit customers to pay off their
accounts during the past year?
Capital budgeting includes the evaluation of which of the following?
Timing and risk of future cash flows only
Risk and size of future cash flows only
Size of future cash flows only
Size, timing, and risk of future cash flows
Size and timing of future cas
Chapter 9 practice Questions
1. Kenny, Inc., is looking at setting up a new manufacturing plant in South Park. The company bought some land six
years ago for $8.0 million in anticipation of using it as a warehouse and distribution site, but the compan
Chapter 10 assignment
Suppose a stock had an initial price of $97 per share, paid a dividend of $2.10 per share during the year,
and had an ending share price of $117.
Requirement 1: Compute the percentage total return.
Percentage total return
#6 Your company will generate $49,000 in cash flow each year for the next nine years from a new
information database. The computer system needed to set up the database costs $276,000. Assume you can
borrow the money to buy the computer system at 10.25 per
Lycan, Inc., has 7.8 percent coupon bonds on the market that have 7 years left to maturity. The bonds make annual payments.
Required: If the YTM on these bonds is 9.8 percent, what is the current bond price?
Current bond price
1. Today, you sold 510 shares of stock at $14.29 a share. These shares were purchased one year ago at a price per share of $13.91.
What is your total dollar return on this investment if you received $625 of dividend income over the past year?
A firm evaluates all of its projects by applying the IRR rule.
Requirement 1: Calculate the IRR.
Internal rate of return
Requirement 2: If the required return is 12 percent, should the firm accept
United Industries stock has an expected return of 14 percent in a normal economy, 22 percent in a booming economy, and
-11 percent in a recessionary economy. The probability of a boom is 10 percent and the probability of a recession is 20
Teddy's Pillows has beginning net fixed assets of $459 and ending net fixed assets of $526.
Assets valued at $307 were sold during the year. Depreciation was $18. What is the amount of
net capital spending?
$526 + $18 $459 = $85
Ivan's, Inc. paid $468 in dividends and $579 in interest this past year. Common stock increased
by $189 and retained earnings decreased by $115. What is the net income for the year?
Net income = $468 + ( $115) = $353 Net income =