FIN 571 WEEK 6 FINAL ( FIN571 WEEK 6 FINALS EXAM MCQ ) FIN/571 WEEK 6 FINAL EXAM QUIZ

| August 14, 2017

1.
Which of the following is considered a hybrid organizational form?
Limited
liability partnership
Partnership
Corporation
Sole
proprietorship
2. Which
of the following is a principal within the agency relationship?
A
shareholder
A
company engineer
The
board of directors
The
CEO of the firm
3. 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
4. Teakap,
Inc., has current assets of $ 1,456,312 and total assets of $4,812,369 for the
year ending September 30, 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?
$2,303,010
$2,123,612
$803,010
$1,844,022
5. Gateway
Corp. has an inventory turnover ratio of 5.6. What is the firm’s days’s sales
in inventory?
64.3
days
57.9
days
65.2
days
61.7
days
6. Your
firm has an equity multiplier of 2.47. What is its debt-to-equity ratio?
0.60
1.74
0
1.47
7.
Which of the following is not a method of “benchmarking”?
Utilize
the DuPont system to analyze a firm’s performance.
Identify
a group of firms that compete with the company being analyzed.
Conduct
an industry group analysis
Evaluating
a single firm’s performance over time.
8. 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.)
$22,680
$26,454
$16,670
$19,444
9.
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
$2,431,224
$2,815,885
$2,735,200
10.
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
$477,235
$414,322
$480,906
11.
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.)
$2,667,904
$3,594,524
$1,745,600
$5,233,442
12.
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.)
16%
32%
40%
12%
13.
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

14.
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
$12.50
$11.63
$13.50
15.
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
0.90
1.90
0.11
16.
What decision criteria should managers use in selecting projects when there is
not enough capital to invest in all available positive NPV projects?
the internal rate of return
the discounted payback
the
modified internal rate of return
the profitability index
17.
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?
30%
70%
33%
50%
18.
If a company’s weighted average cost of capital is less than the required
return on equity, then the firm:
is financed with more than 50% debt
is perceived to be safe
has debt in its capital structure
partnership
19.
Gangland Water Guns, Inc., is expected to pay a dividend of $2.10 one year from
today. If the firm’s growth in dividends is expected to remain at a flat 3
percent forever, then what is the cost of equity capital for Gangland if the
price of its common shares is currently $17.50?
15.00%
12.00%
15.36%
14.65%
20.
A firm’s capital structure is the mix of financial securities used to finance
its activities and can include all of the following except
stock.
bonds.
equity options.
preferred stock.
21.
Dynamo Corp. produces annual cash flows of $150 and is expected to exist
forever. The company is currently financed with 75 percent equity and 25
percent debt. Your analysis tells you that the appropriate discount rates are
10 percent for the cash flows, and 7 percent for the debt. You currently own 10
percent of the stock.
If
Dynamo wishes to change its capital structure from 75 percent to 60 percent
equity and use the debt proceeds to pay a special dividend to shareholders, how
much debt should they issue?
$600
$225
$321
$375
22.
Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its
depreciation and amortization expenses amounted to $84 million. The firm has
135 million shares outstanding and a share price of $12.80. A competing firm
that is very similar to Turnbull has an enterprise value/EBITDA multiple of
5.40.
What
is the enterprise value of Turnbull Corp.? Round to the nearest million
dollars.
$1,315
million
$1,334
million
$1,787
million
$453.6
million
23.
Jockey Company has total assets worth $4,417,665. At year-end it will have net
income of $2,771,342 and pay out 60 percent as dividends. If the firm wants no
external financing, what is the growth rate it can support?
30.3%
27.3%
32.9%
25.1%
24.
Which of the following cannot be engaged in managing the business?
a sole proprietor
a general partner
a limited partner
none of these
25.
Which of the following does maximizing shareholder wealth not usually account
for?
Government regulation.
Risk.
The timing of cash flows.
Amount of Cash flows.
26.
The strategic plan does NOT identify
working capital strategies.
the lines of business a firm will compete
in.
major areas of investment in real assets.
future mergers, alliances, and
divestitures.
27.
Firms that achieve higher growth rates without seeking external financing
none of these.
have a low plowback ratio.
have less equity and/or are able to
generate high net income leading to a high ROE.
are highly leveraged.
28.
Drekker, Inc., has revenues of $312,766, costs of $220,222, interest payment of
$31,477, and a tax rate of 34 percent. It paid dividends of $34,125 to
shareholders. Find the firm’s dividend payout ratio and retention ratio.
85%, 15%
45%, 55%
15%, 85%
55%, 45%
29.
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.
estimates how long it takes on average for
the firm to collect its outstanding accounts receivable balance.
shows how long the firm keeps its
inventory before selling it.
begins
when the firm invests cash to purchase the raw materials that would be used to
produce the goods that the firm manufactures.
30.
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?
129.9 days
46.4 days
83.5 days
38.3 days

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