1.On January 31, an entity's balance sheet showed total assets of $750 and liabilities of $250. Owners' equity at January 31 was:

A) $500

B) $1,000

C) $750

D) $250

2.If a firm's payment terms for sales made on account to its customers were 2/10, n30, the number of days' sales in accounts receivable would be expected to be:

A) less than 10.

B) between 10 and 25.

C) between 25 and 40.

D) over 40.

3.What percentage of the contribution margin is profit on units sold in excess of the breakeven point?

A) It's 50% to the contribution margin ratio.

B) It's equal to the variable cost ratio.

C) It's equal of the gross profit ratio.

D) It's 100%.

4.What is the cash conversion cycle for a firm with $3 million average inventories, $1.5 million average accounts payable, a receivables period of 40 days, and an annual cost of goods sold of $18 million?

A) 14.59 days

B) 46.25 days

C) 70.41 days

D) 136.25 days

5.Assume the total expense for your current year in college equals $20,000. Approximately how much would your parents have needed to invest 21 years ago in an account paying 8% compounded annually to cover this amount?

A) $ 952

B) $1,600

C) $1,728

D) $3,973

6.What is the rate of return for an investor who pays $1,054.47 for a three-year bond with a 7% coupon and sells the bond one year later for $1,037.19?

A) 5.00%

B) 5.33%

C) 6.46%

D) 7.00%

7.What is the required return for a stock that has a 5% constant growth rate, a price of $25, an expected dividend of $2, and a P/E ratio of 10?

A) 5%

B) 10%

C) 13%

D) 22%

8.A firm has an expected return on equity of 16% and an after-tax cost of debt of 8%. What debt-equity ratio should be used in order to keep the WACC at 12%?

A) .50

B) .75

C) 1.00

D) 1.50

A) $500

B) $1,000

C) $750

D) $250

2.If a firm's payment terms for sales made on account to its customers were 2/10, n30, the number of days' sales in accounts receivable would be expected to be:

A) less than 10.

B) between 10 and 25.

C) between 25 and 40.

D) over 40.

3.What percentage of the contribution margin is profit on units sold in excess of the breakeven point?

A) It's 50% to the contribution margin ratio.

B) It's equal to the variable cost ratio.

C) It's equal of the gross profit ratio.

D) It's 100%.

4.What is the cash conversion cycle for a firm with $3 million average inventories, $1.5 million average accounts payable, a receivables period of 40 days, and an annual cost of goods sold of $18 million?

A) 14.59 days

B) 46.25 days

C) 70.41 days

D) 136.25 days

5.Assume the total expense for your current year in college equals $20,000. Approximately how much would your parents have needed to invest 21 years ago in an account paying 8% compounded annually to cover this amount?

A) $ 952

B) $1,600

C) $1,728

D) $3,973

6.What is the rate of return for an investor who pays $1,054.47 for a three-year bond with a 7% coupon and sells the bond one year later for $1,037.19?

A) 5.00%

B) 5.33%

C) 6.46%

D) 7.00%

7.What is the required return for a stock that has a 5% constant growth rate, a price of $25, an expected dividend of $2, and a P/E ratio of 10?

A) 5%

B) 10%

C) 13%

D) 22%

8.A firm has an expected return on equity of 16% and an after-tax cost of debt of 8%. What debt-equity ratio should be used in order to keep the WACC at 12%?

A) .50

B) .75

C) 1.00

D) 1.50

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