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Quesfions I to 20: Select the best answer to each question. Note that a question and its answers may be split across a page brealr, so be sure that you have seen the entire question and, all the answers before choosing an answer. L. Centerville Company's debt-to-equity ratio is 0.60 Total assets are $320,000, current assets are $170,000, and working capital is $80,000. Centerville's long-term liabilities must be A. $30,000. B. $90,000. c. $80,000. D. $120,000. Use the following information to answer this question. The most recent balance sheet and income statement of Teramoto Corporation appear below: Comparative Balance Sheet Assets: Cash and cash equivalents Accounts receivable lnventory Plant and equipment Less accumulated depreciation Total assets Liabilities and stockholders' equity Accounts payable Wages payable Taxes payable Bonds payable Deferred taxes Common stock Retained earnings Total liabilities and stocktolders' equity Income Statement Sales Cost of good sold Gross margin Selling and administative expense Net operating income Income taxes Ending Balance $43 53 73 582 301 $4s0 - $s7 2l 15 2t 20 55 26r $450 s893 587 306 189 117 35 Beginning Balance $35 59 69 490 M W $48 18 13 20 2t 50 t97 $367 -
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Net incoine Cash dividends were $18. 2. The net cash provided by (used by) financing activities for the year was A. ($18). B. ($12). c. $s. D. $1. 3, A weakness of the intemal rate of retum method for screening invesfinent projects is that it A. implicitly as$unes that the company is able to reinvest cash flows from the project at the intemal rate of return. B. implicitly assumes that the company is able to reinvest cash flows from the project at the company's discount rate. C. doesn't consider the time value of money. D. doesnt take into account all of the cash flows from a project. 4. (Ignore income tanes in this problem.) The following data pertain to an investnent: Cost of the inveshnent $18,955 Life ofthe project 5 years Annual cost savings $5,000 Estimated salvage value $1,000 Discount rate l0% The net present value of the proposed investment is A. s(3,430). B. $621. c. $3,355. D. $0. 5. Which of the following would be classified as a financing activity on the statement of cash flows? A. Dividends paid to shareholders of the company on the company's common stock B. Dividends received on invesfinents in another company's common stock C. lnterest received on investnents in another company's bonds D, Interest paid on bonds issued by the reporting company 6. The net present value method assumes that the project's cash flows are reinvested at the A. intemal rate of retum. B. simple rate of return. C. discount rate used in the net present value calculation. D. payback rate of return. Use the following information to answer this question. Financial statements for Larkins Company appear below: s82 &
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Centerville Company.docx

1. A. $30,000
2. B. ($12)
3. A. implicitly assumes that the company is able to reinvest cash flows from the project at the internal rate of return.
4. B. $621
5. A. Dividends paid to shareholders...

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