Finance 30 Question Quiz Assistance

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Which of the following is considered a hybrid organizational form?

partnership

corporation

sole proprietorship Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper

limited liability partnership

Which of the following is a principal within the agency relationship?

the CEO of the firm

a shareholder

the board of directors

a company engineer

Which of the following presents a summary of the changes in a firm’s balance sheet from the beginning of an accounting period to the end of that accounting period?

The statement of cash flows.

The statement of retained earnings.

The statement of working capital.

The statement of net worth.

Teakap, Inc., has current assets of $ 1,456,312 and total assets of $4,812,369 for the year ending September 3

0

, 2006. It also has current liabilities of $1,041,012, common equity of $1,500,000, and retained earnings of $1,468,347. How much long-term debt does the firm have?

$803,010

$1,844,022

$2,123,612

$2,303,010

Efficiency ratio: Gateway Corp. has an inventory turnover ratio of 5.6. What is the firm’s days’s sales in inventory?

61.7 days

57.9 days

65.2 days

64.3 days

Leverage ratio: Your firm has an equity multiplier of 2.47. What is its debt-to-equity ratio?

0.60

1.74

1.47

0

Which of the following is not a method of “benchmarking”?

Identify a group of firms that compete with the company being analyzed.

Evaluating a single firm’s performance over time.

Conduct an industry group analysis.

Utilize the DuPont system to analyze a firm’s performance.

Present value: Jack Robbins is saving for a new car. He needs to have $ 21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target? (Round to nearest dollar.)

$16,670

$26,454

$19,444

$22,680

PV of multiple cash flows: Ferris, Inc., has borrowed from their bank at a rate of 8 percent and will repay the loan with interest over the next five years. Their scheduled payments, starting at the end of the year are as follows—$450,000, $560,000, $750,000, $875,000, and $1,000,000. What is the present value of these payments? (Round to the nearest dollar.)

$2,615,432

$2,735,200

$2,431,224

$2,815,885

PV of multiple cash flows: Ajax Corp. is expecting the following cash flows—$79,000, $112,000, $164,000, $84,000, and $242,000—over the next five years. If the company’s opportunity cost is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.)

$429,560

$414,322

$480,906

$477,235

Future value of an annuity: Jayadev Athreya has started on his first job. He plans to start saving for retirement early. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent. How much will Jayadev have at the end of 45 years? (Round to the nearest dollar.)

$3,594,524

$1,745,600

$5,233,442

$2,667,904

Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year? (Round to the nearest percent.)

12%

16%

40%

32%

Bond price: Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company’s bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)

$923

$972

$1,066

$1,014

PV of dividends: Next year Jenkins Traders will pay a dividend of $3.00. It expects to increase its dividend by $0.25 in each of the following three years. If their required rate of return is 14 percent, what is the present value of their dividends over the next four years?

$9.72

$13.50

$12.50

$11.63

Capital rationing. TuleTime Comics is considering a new show that will generate annual cash flows of $100,000 into the infinite future. If the initial outlay for such a production is $1,500,000 and the appropriate discount rate is 6 percent for the cash flows, then what is the profitability index for the project?

1.11

0.11

1.90

0.90

What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?

The profitability index.

The discounted payback.

The internal rate of return.

The modified internal rate of return.

How firms estimate their cost of capital: The WACC for a firm is 13.00 percent. You know that the firm’s cost of debt capital is 10 percent and the cost of equity capital is 20%. What proportion of the firm is financed with debt? 70% 33% 30% 50% The cash conversion cycle begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales. begins when the firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures. shows how long the firm keeps its inventory before selling it. estimates how long it takes on average for the firm to collect its outstanding accounts receivable balance. You are provided the following working capital information for the Ridge Company: Ridge Company Account $ Inventory $12,890 Accounts receivable 12,800 Accounts payable 12,670 Net sales $124,589 Cost of goods sold 99,630 Cash conversion cycle: What is the cash conversion cycle for Ridge Company? 38.3 days 83.5 days 129.9 days 46.4 days