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FIN 370 Enthusiastic Learning / snaptutorial.com

Exchange Commission<br>Post a summary of your research in the Learning Team forum that includes the following:<br>u2022tWhat position did the individual hold within or outside of Enron?<br>u2022tWhat role did the person play in the Enron case?<br>

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FIN 370 Enthusiastic Learning / snaptutorial.com

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  1. FIN 370 Assignment Week 1 Apply Exercise For more classes visit www.snaptutorial.com FIN 370 Week 1 Apply Exercise Review the Week 1 ―Knowledge Check‖ in Connect® in preparation for this assignment. Complete the Week 1 ―Exercise‖ in Connect®. Note: You have only one attempt available to complete this assignment. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after your due date. Materials  Learn: McGraw-Hill Connect® Access Maximizing owners’ equity value means carefully considering all of the following EXCEPT Multiple Choice how best to return the profits from those projects to the owners over time. which projects to invest in. how to best bring additional funds into the firm. how best to increase the firm’s risk. Not all cash a company generates will be returned to the investors. Which of the following will NOT reduce the amount of capital returned to the investors? Multiple Choice

  2. taxes dividends retained earnings As individual legal entities, corporations assume liability for their own debts, so the shareholders hold Multiple Choice unlimited liability. shared liability. joint liability. only limited liability. For corporations, maximizing the value of owner’s equity can also be stated as Multiple Choice maximizing the stock price. maximizing earnings per share. maximizing retained earnings. maximizing net income. Which of the following is not an impact of the slowdown occurring in China’s economy? Multiple Choice falling community prices lower demand in materials such as steel, iron ore, and copper real estate market declining in Sydney, Australia money going out of Manhattan, New York What is the debt ratio for a firm with an equity multiplier of 3.5? Multiple Choice 58.51 percent 66.25 percent 44.09 percent 71.43 percent Which of the following refer to ratios that measure the relationship between a firm’s liquid (or current) assets and its current liabilities? Multiple Choice internal-growth market value liquidity

  3. cross-section For publicly traded firms, which of these ratios measure what investors think of the company’s future performance and risk? Multiple Choice profitability ratios liquidity ratios price value ratios market value ratios Which of the following is the maximum growth rate that can be achieved by financing asset growth with new debt and retained earnings? Multiple Choice sustainable growth rate weighted growth rate internal growth rate retained earnings growth rate To interpret financial ratios, managers, analysts, and investors use which of the following type of benchmarks? Multiple Choice time series analysis time-industry analysis competitive analysis cross-industry analysis n both the original deposit and on the earlier interest payments Multiple Choice discounting. computing. multiplying. compounding. MC Qu. 4-71 A deposit of $500 earns 5… A deposit of $500 earns 5 percent the first year, 6 percent the second year, and 7 percent the third year. What would be the third year future value? Multiple Choice $595.46 $634.91

  4. $671.02 $615.62 MC Qu. 4-9 With regard to money deposited in… With regard to money deposited in a bank, future values are Multiple Choice smaller than present values. are completely independent of present values. equal to present values. larger than present values. MC Qu. 4-17 What is the future value of… What is the future value of $2,000 deposited for one year earning 6 percent interest rate annually? Multiple Choice $4,120 $2.000 $120 $2,120 MC Qu. 4-10 A dollar paid (or received) in… A dollar paid (or received) in the future is Multiple Choice not comparable to a dollar paid (or received) today. worth as much as a dollar paid (or received) today. worth more than a dollar paid (or received) today. not worth as much as a dollar paid (or received) today. MC Qu. 4-29 Approximately how many years does it… Approximately how many years does it take to double a $300 investment when interest rates are 8 percent per year? Multiple Choice 9 years 11 years 4.17 years 0.11 years MC Qu. 4-7 The interest rate, i, which we… The interest rate, i, which we use to calculate present value, is often referred to as the

  5. Multiple Choice compound rate. dividend. multiplier. discount rate. MC Qu. 4-73 What is the present value of… What is the present value of a $600 payment in one year when the discount rate is 8 percent? Multiple Choice $525.87 $575.09 $555.56 $498.61 MC Qu. 4-78 Approximately what rate is needed to… Approximately what rate is needed to double an investment over five years? Multiple Choice 12.2 percent 8 percent 15.8 percent 14.4 percent MC Qu. 4-79 Determine the interest rate earned on… Determine the interest rate earned on an $800 deposit when $808 is paid back in one year. Multiple Choice 100 percent 15 percent 10 percent 1 percent MC Qu. 4-109 You double your money in 5… You double your money in five years. The reason your return is not 20 percent per year is because: Multiple Choice it is probably a ―fad‖ investment. it does not reflect the effect of the Rule of 72.

  6. it does not reflect the effect of compounding. it does not reflect the effect of discounting. MC Qu. 5-146 Which of the following will increase… Which of the following will increase the future value of an annuity? Multiple Choice The number of periods increases. The amount of the annuity increases. The interest rate increases. All of these choices are . MC Qu. 5-22 What is the future value of… What is the future value of a $1,000 annuity payment over 4 years if the interest rates are 8 percent? Multiple Choice $4,506.11 $9,214.20 $4,320.00 $3,312.10 MC Qu. 5-74 If the present value of an… If the present value of an ordinary, 8-year annuity is $12,500 and interest rates are 9.1 percent, what is the present value of the same annuity due? Multiple Choice $14,114.80 $14,211.90 $13,941.90 $13,637.50 MC Qu. 5-147 Which of the following will increase… Which of the following will increase the present value of an annuity? Multiple Choice The effective rate is calculated over fewer years. The amortization schedule decreases. The interest rate decreases. The number of periods decreases. MC Qu. 5-30 If the future value of an… If the future value of an ordinary, 7-year annuity is $10,000 and interest rates are 4 percent, what is the future value of the same annuity due?

  7. Multiple Choice $10,700.00 $10,000.00 $10,400.00 $9,615.38 MC Qu. 5-31 If the future value of an… If the future value of an ordinary, 4-year annuity is $1,000 and interest rates are 6 percent, what is the future value of the same annuity due? Multiple Choice $943.40 $1,000.00 $1,040.00 $1,060.00 MC Qu. 5-33 A loan is offered with monthly… A loan is offered with monthly payments and a 6.5 percent APR. What is the loan’s effective annual rate (EAR)? Multiple Choice 5.69 percent 12.63 percent 7.28 percent 6.697 percent MC Qu. 5-15 People refinance their home… People refinance their home mortgages Multiple Choice when rates fall and rise. whenever they need to, independent of rates. when rates fall. when rates rise. ********************************************** FIN 370 Assignment Week 1 Practice Knowledge Check

  8. For more classes visit www.snaptutorial.com FIN 370 Week 1 Practice Knowledge Check Completethe Week 1 ―Knowledge Check‖ in Connect®. Note: You have unlimited attempts available to complete this practice assignment. The highest scored attempt will be recorded. These assignments have earlier due dates, so plan accordingly. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after your due date. MC Qu. 1-14 Which of the following managers would… Which of the following managers would NOT use finance? Multiple Choice human resource managers marketing managers operational managers all of these choices are . MC Qu. 1-11 Which of the following is defined… Which of the following is defined as a group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations? Multiple Choice market instruments investments financial markets asset classes MC Qu. 1-63 An angel investor differs from a… An angel investor differs from a venture capitalist because of the Multiple Choice size of investment.

  9. voting rights. type of investment. investment time frame. MC Qu. 1-18 This type of business organization is… This type of business organization is entirely legally independent from its owners. Multiple Choice hybrid organizations partnership sole proprietorship public corporations MC Qu. 1-67 Which of these is the system… Which of these is the system of incentives and monitors that tries to overcome the agency problem? Multiple Choice checks and Balances Security Exchange Commission board of Directors corporate Governance MC Qu. 1-54 From the perspective of control, the… From the perspective of control, the best form of business organization is the Multiple Choice corporation. partnership. S corporation. sole proprietorship. MC Qu. 1-19 Which of the following is… Which of the following is NOT considered a hybrid organization? Multiple Choice limited liability partnership limited liability company limited partnership all of these choices are . S corporation MC Qu. 1-1 The increase in oil production in… The increase in oil production in the United States characterizes which of the following key financial concepts presented in this book? Multiple Choice the Rule of 72 time value of money capital budgeting risk and return MC Qu. 1-59 All of the following are an…

  10. All of the following are an example of a fiduciary relationship EXCEPT Multiple Choice a financial advisor advises her clients. a CEO manages the firm. the shareholder elects a board member. a bank employee manages deposits. MC Qu. 3-85 Which ratio assesses how efficiently a… Which ratio assesses how efficiently a firm uses its fixed assets? Multiple Choice capital intensity ratio current ratio fixed asset turnover average collection period MC Qu. 3-90 A firm reported working capital of… A firm reported working capital of $5.5 million and fixed assets of $20 million. Its fixed asset turnover was 1.2 times. What was the firm’s sales to working capital ratio? Multiple Choice 4.36 times 6.03times 2.21 times 5.19 times MC Qu. 3-103 Which ratio measures the number of… Which ratio measures the number of dollars of operating cash available to meet each dollar of interest and other fixed charges that the firm owes? Multiple Choice fixed-charge coverage ratio cash coverage ratio operating coverage ratio times interest earned MC Qu. 3-25 You are evaluating the balance sheet… You are evaluating the balance sheet for Blue Jays Corporation. From the balance sheet you find the following balances: cash and marketable securities = $200,000, accounts receivable = $800,000, inventory = $1,000,000, accrued wages and taxes = $250,000, accounts payable = $400,000, and notes payable = $300,000. What are Blue Jays’ current ratio, quick ratio, and cash ratio, respectively? Multiple Choice 3.07692, 1.53846, 0.30769 1.05263, 1.05263, 0.21053

  11. 2.10526, 1.05263, 0.21053 3.07692, 1.05263, 0.30769 MC Qu. 3-6 Which of the following ratios measure… Which of the following ratios measure how efficiently a firm uses its assets, as well as how efficiently the firm manages its accounts payable? Multiple Choice quick or acid-test cash internal-growth asset management MC Qu. 3-20 For publicly traded firms, which of… For publicly traded firms, which of these ratios measure what investors think of the company’s future performance and risk? Multiple Choice profitability ratios liquidity ratios price value ratios market value ratios MC Qu. 3-116 Which ratio measures the overall return… Which ratio measures the overall return on the firm’s assets including financial leverage and taxes? Multiple Choice basic earning power ROE ROA profit margin MC Qu. 3-112 The maximum growth rate that can… The maximum growth rate that can be achieved by financing asset growth with internal financing or retained earnings is called the Multiple Choice internal growth rate. sustainable growth rate. retention rate. operating expansion rate. MC Qu. 3-22 Which of the following is the…

  12. Which of the following is the maximum growth rate that can be achieved by financing asset growth with new debt and retained earnings? Multiple Choice weighted growth rate internal growth rate sustainable growth rate retained earnings growth rate MC Qu. 3-23 To interpret financial ratios, managers, analysts,… To interpret financial ratios, managers, analysts, and investors use which of the following type of benchmarks? Multiple Choice time series analysis cross-industry analysis time-industry analysis competitive analysis MC Qu. 3-42 Last year Poncho Villa Corporation had… Last year Poncho Villa Corporation had an ROA of 16 percent and a dividend payout ratio of 25 percent. What is the internal growth rate? Multiple Choice 13.64 percent 33.33 percent 25.40 percent 1.19 percent ********************************************** FIN 370 Assignment Week 2 Practice Knowledge Check For more classes visit www.snaptutorial.com

  13. FIN 370 Week 2 Practice Knowledge Check Completethe Week 2 ―Knowledge Check‖ in Connect®. Note: You have unlimited attempts available to complete this practice assignment. The highest scored attempt will be recorded. These assignments have earlier due dates, so plan accordingly. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after your due date. Materials Learn: McGraw-Hill Connect® Access MC Qu. 4-16 What is the future value of… What is the future value of $1,000 deposited for one year earning 5 percent interest rate annually? Multiple Choice $1,005 $1,000 $2,050 $1,050 MC Qu. 4-5 We call the process of earning… We call the process of earning interest on both the original deposit and on the earlier interest payments Multiple Choice discounting. computing. multiplying. compounding. MC Qu. 4-71 A deposit of $500 earns 5… A deposit of $500 earns 5 percent the first year, 6 percent the second year, and 7 percent the third year. What would be the third year future value? Multiple Choice $595.46

  14. $634.91 $671.02 $615.62 MC Qu. 4-9 With regard to money deposited in… With regard to money deposited in a bank, future values are Multiple Choice smaller than present values. are completely independent of present values. equal to present values. larger than present values. MC Qu. 4-17 What is the future value of… What is the future value of $2,000 deposited for one year earning 6 percent interest rate annually? Multiple Choice $4,120 $2.000 $120 $2,120 MC Qu. 4-10 A dollar paid (or received) in… A dollar paid (or received) in the future is Multiple Choice not comparable to a dollar paid (or received) today. worth as much as a dollar paid (or received) today. worth more than a dollar paid (or received) today. not worth as much as a dollar paid (or received) today. MC Qu. 4-29 Approximately how many years does it… Approximately how many years does it take to double a $300 investment when interest rates are 8 percent per year? Multiple Choice 9 years 11 years 4.17 years 0.11 years MC Qu. 4-7 The interest rate, i, which we…

  15. The interest rate, i, which we use to calculate present value, is often referred to as the Multiple Choice compound rate. dividend. multiplier. discount rate. MC Qu. 4-73 What is the present value of… What is the present value of a $600 payment in one year when the discount rate is 8 percent? Multiple Choice $525.87 $575.09 $555.56 $498.61 MC Qu. 4-78 Approximately what rate is needed to… Approximately what rate is needed to double an investment over five years? Multiple Choice 12.2 percent 8 percent 15.8 percent 14.4 percent MC Qu. 4-79 Determine the interest rate earned on… Determine the interest rate earned on an $800 deposit when $808 is paid back in one year. Multiple Choice 100 percent 15 percent 10 percent 1 percent MC Qu. 4-109 You double your money in 5… You double your money in five years. The reason your return is not 20 percent per year is because: Multiple Choice

  16. it is probably a ―fad‖ investment. it does not reflect the effect of the Rule of 72. it does not reflect the effect of compounding. it does not reflect the effect of discounting. MC Qu. 5-146 Which of the following will increase… Which of the following will increase the future value of an annuity? Multiple Choice The number of periods increases. The amount of the annuity increases. The interest rate increases. All of these choices are . MC Qu. 5-22 What is the future value of… What is the future value of a $1,000 annuity payment over 4 years if the interest rates are 8 percent? Multiple Choice $4,506.11 $9,214.20 $4,320.00 $3,312.10 MC Qu. 5-74 If the present value of an… If the present value of an ordinary, 8-year annuity is $12,500 and interest rates are 9.1 percent, what is the present value of the same annuity due? Multiple Choice $14,114.80 $14,211.90 $13,941.90 $13,637.50 MC Qu. 5-147 Which of the following will increase… Which of the following will increase the present value of an annuity? Multiple Choice The effective rate is calculated over fewer years. The amortization schedule decreases. The interest rate decreases. The number of periods decreases. MC Qu. 5-30 If the future value of an…

  17. If the future value of an ordinary, 7-year annuity is $10,000 and interest rates are 4 percent, what is the future value of the same annuity due? Multiple Choice $10,700.00 $10,000.00 $10,400.00 $9,615.38 MC Qu. 5-31 If the future value of an… If the future value of an ordinary, 4-year annuity is $1,000 and interest rates are 6 percent, what is the future value of the same annuity due? Multiple Choice $943.40 $1,000.00 $1,040.00 $1,060.00 MC Qu. 5-33 A loan is offered with monthly… A loan is offered with monthly payments and a 6.5 percent APR. What is the loan’s effective annual rate (EAR)? Multiple Choice 5.69 percent 12.63 percent 7.28 percent 6.697 percent MC Qu. 5-15 People refinance their home… People refinance their home mortgages Multiple Choice when rates fall and rise. whenever they need to, independent of rates. when rates fall. when rates rise. **********************************************

  18. FIN 370 Assignment Week 3 Practice Knowledge Check For more classes visit www.snaptutorial.com FIN 370 Assignment Week 3 PracticeKnowledge Check Completethe Week 3 ―Knowledge Check‖ in Connect®. Note: You have unlimited attempts available to complete this practice assignment. The highest scored attempt will be recorded. These assignments have earlier due dates, so plan accordingly. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after your due date. MC Qu. 7-67 Which of the following is NOT… Which of the following is NOT true about EE savings bonds? Multiple Choice These are tax deferred investments. Interest payments are received annually but are tax deductible.

  19. About one in six Americans owns a savings bond. Paper bonds sell for one-half of their face value. MC Qu. 7-4 Which of the following is a legal… Which of the following is a legal contract that outlines the precise terms between the issuer and the bondholder? Multiple Choice Prospectus Enforcement codes Debenture Indenture

  20. MC Qu. 7-125 A 4.15 percent TIPS has an… A 4.15 percent TIPS has an original reference CPI of 182.1. If the current CPI is 188.3, what is the par value of the TIPS? Multiple Choice $1,000.00 $1,004.75 $967.07 $1,034.05 MC Qu. 7-124 A 2.95 percent TIPS has an… A 2.95 percent TIPS has an original reference CPI of 180.2. If the current CPI is 205.1, what is the current interest payment and par value of the TIPS? (Assume semi-annual interest payments and $1,000 par value.) Multiple Choice $878.60, $16.79, respectively

  21. $1,000.00, $29.50, respectively $1,138.18, $29.50, respectively $1,138.18, $16.79, respectively MC Qu. 7-81 A 5.125 percent TIPS has an… A 5.125 percent TIPS has an original reference CPI of 191.8. If the current CPI is 188.3, what is the par value of the TIPS? Multiple Choice $992.75 $981.75 $1,018.60 $1,042.95

  22. MC Qu. 7-38 Calculate the price of a zero… Calculate the price of a zero coupon bond that matures in 10 years if the market interest rate is 6 percent. (Assume semi-annual compounding and $1,000 par value.) Multiple Choice $1,000.00 $553.68 $558.66 $940.00 MC Qu. 7-18 Which of the following terms means… Which of the following terms means the chance that future interest payments will have to be reinvested at a lower interest rate? Multiple Choice

  23. Credit quality risk Interest rate risk Reinvestment rate risk Liquidity rate risk MC Qu. 7-43 What’s the taxable equivalent yield on a municipal… What’s the taxable equivalent yield on a municipal bond with a yield to maturity of 3.9 percent for an investor in the 35 percent marginal tax bracket? Multiple Choice 1.09% 6.00% 11.14% 3.90%

  24. MC Qu. 7-21 Which of the following is an… Which of the following is an important advantage to the issuer of a bond with a call provision? Multiple Choice They allow for refinancing opportunities. They are able to avoid reinvestment rate risk. They are able to avoid interest rate risk. They are able to reduce their credit risk. Which of the following are backed only by the reputation and financial stability of the corporation? Multiple Choice

  25. Both debentures and unsecured bonds Debentures None of the options Unsecured bonds Which of the following terms is the chance that the bond issuer will not be able to make timely payments? Multiple Choice Interest rate risk Liquidity of interest rate risk Term structure of interest rates Credit quality risk

  26. As residual claimants, which of these investors claim any cash flows to the firm that remain after the firm pays all other claims? rev: 07_10_2017_QC_CS-93259 Multiple Choice preferred stockholders creditors common stockholders bondholders All of the following are stock market indices EXCEPT: Multiple Choice

  27. Dow Jones Industrial Average. Standard & Poor’s 500 Index. Nasdaq Composite Index. Mercantile 1000. You would like to sell 400 shares of International Business Machines (IBM). The current bid and ask quotes are $96.24 and $96.17, respectively. You place a limit sell-order at $96.20. If the trade executes, how much money do you receive from the buyer? Multiple Choice $38,464.00 $38,496.00 $38,468.00 $38,480.00

  28. Investors sell stock at the: Multiple Choice dealer price. broker price. bid price. quoted ask price. At your discount brokerage firm, it costs $9.95 per stock trade. How much money do you need to buy 100 shares of Ralph Lauren (RL), which trades at $85.13? Multiple Choice $8,503.05

  29. $8,503.00 $9,508.00 $8,522.95 A preferred stock from DLC pays $5.10 in annual dividends. If the required return on the preferred stock is 12.1 percent, what is the value of the stock? Multiple Choice $42.15 $47.25 $240.97 $6.31

  30. At your discount brokerage firm, it costs $10.50 per stock trade. How much money do you need to buy 100 shares of Apple (AAPL), which trades at $202.64? Multiple Choice $21,314.00 $20,274.50 $20,253.50 In $20,264.00 JPM has earnings per share of $3.75 and P/E of 47. What is the stock price? Multiple Choice $185.95 $174.08

  31. $112.98 $176.25 Pfizer, Inc. (PFE) has earnings per share of $2.09 and a P/E ratio of 11.02. What is the stock price? Multiple Choice $18.97 $5.27 $23.03 $0.19 **********************************************

  32. FIN 370 Cash Flow Problem Sets (4-5,4-7,4-8,4- 11,4-13) For more classes visit www.snaptutorial.com 4-5 Multiyear Future Value How much would be in your savings account in 11 years after depositing $150 today if the bank pays 8 percent per year? (LG4-3) 4-7 Compounding with Different Interest Rates A deposit of $350 earns the following interest rates: a. 8 percent in the first year. b. 6 percent in the second year. c. 5.5 percent in the third year. What would be the third year future value? 4-8 Compounding with Different Interest Rates A deposit of $750 earns interest rates of 9 percent in the first year and 12 percent in the second year. What would be the second year future value? (LG4-3) 4-11 Present Value What is the present value of a $1,500 payment made in nine years when the discount rate is 8 percent? (LG4-4) 4-13 Present Value with Different Discount Rates Compute the present value of $1,000 paid in three years using the following discount rates: 6

  33. percent in the first year, 7 percent in the second year, and 8 percent in the third year. (LG4-4) ********************************************** FIN 370 Entire Course New Syllabus, with Final Guide For more classes visit www.snaptutorial.com FIN 370 Final Exam Guide (New 2017) FIN 370 Week 1 Question and Problem Sets (Ch 1: Q 3,11 Ch 2: Q4,9, CH 3: Q4,7, Ch 4: Q 1,6) FIN 370 Week 2 Question and Problem Sets (Ch 5: Q3,Q4 Ch 6: Q2, Q20, Ch 7 : Q3,Q11 Ch 8: Q1,Q6) FIN 370 Week 3 Question and Problem Sets (Ch 9: Q7 & Q8, Ch 10: Q3& Q13, Ch 11: Q 1 & Q7)

  34. FIN 370 Week 3 Assignment Financial Ratio analysis FIN 370 Week 4 Team Weighted Average Cost of Capital FIN 370 Week 4 Individual WACC and Corporate Investment Decisions FIN 370 Week 5 Question and Problem Set (Ch18-Q3, Ch18-Q11, Ch20-Q8, Ch20-Q14, Ch21-Q4, Ch21-Q7, Ch26-Q1, Ch26-Q2) ********************************************** FIN 370 Final Exam Guide (New) For more classes visit www.snaptutorial.com Which financial statement reports the amounts of cash that the firm generated and distributed during a particular time period? statement of retained earnings

  35. Income statement Statement of cash flows Balance sheet Which of these provide a forum in which demanders of funds raise funds by issuing new financial instruments, such as stocks and bonds? Money markets Investment banks Primary markets Secondary markets The top part of Mars, Inc.’s 2013 balance sheet is listed as follows (in millions of dollars). What are Mars, Inc.’s current ratio, quick ratio, and cash ratio for 2013? 4.2, 1.0, 0.2 2.3333, 0.5556, 0.1111 10.5, 6.0, 1.0 0.1111, 0.5556, 0.2

  36. Which of these ratios show the combined effects of liquidity, asset management, and debt management on the overall operation results of the firm? Financial Profitability Coverage Liquidity As new capital budgeting projects arise, we must estimate__________. the cost of the stock being sold for the specific project when such projects will require cash flows the cost of the loan for the specific project the float costs for financing the project What’s the current yield of a 6 percent coupon corporate bond quoted at a price of 101.70? 6.1 percent 10.2 percent 6.0 percent

  37. 5.9 percent We call the process of earning interest on both the original deposit and on the earlier interest payments: computing. multiplying. compounding. discounting. Which financial statement reports a firm’s assets, liabilities, and equity at a particular point in time? Balance sheet Income statement Statement of retained earnings Statement of cash flows You are trying to pick the least-expensive machine for your company. You have two choices: machine A, which will cost $50,000 to purchase and which will have OCF of -$3,500 annually throughout the machine’s expected life of three years; and machine B, which will cost $75,000 to purchase and which will have OCF of -$4,900 annually throughout that machine’s four-year life. Both machines will be worthless at the end of their life. If you intend to replace whichever type of machine you choose with the same thing when its life runs out, again and again out into the foreseeable future, and if your business has a cost of capital of 14 percent, which one should you choose?

  38. Machine A Machine B Neither machine A nor B Both machines A and B When firms use multiple sources of capital, they need to calculate the appropriate discount rate for valuing their firm’s cash flows as__________. a simple average of the capital components costs a weighted average of the capital components costs a sum of the capital components costs they apply to each asset as they are purchased with their respective forms of debt or equity Which of these is used as a measure of the total amount of available cash flow from a project? Operating cash flow Investment in operating capital Free cash flow Sunk cash flow Which of these does NOT perform vital functions to securities markets of all sorts by channeling funds from those with surplus funds to those with shortages of funds? Secondary markets

  39. Mutual funds Insurance companies Commercial banks Will’s Wheels, Inc. reported a debt-to-equity ratio of 0.65 times at the end of 2013. If the firm’s total debt at year-end was $5 million, how much equity does Will’s Wheels have? $7.69 million $5 million $0.65 million $3.25 million Which of these is the term for portfolios with the highest return possible for each risk level? Total portfolios Modern portfolios Optimal portfolios Efficient portfolios What are the tools available for the manager in financial planning?

  40. Delaying disbursement of cash, reducing collection period, cash management, and Increasing inventory turnover Reducing collection period and delaying disbursement of cash Increasing inventory turnover and reducing collection period Delaying disbursement of cash and cash management Suppose that Model Nails, Inc.’s capital structure features 60 percent equity, 40 percent debt, and that its before-tax cost of debt is 6 percent, while its cost of equity is 10 percent. If the appropriate weighted average tax rate is 28 percent, what will be Model Nails’ WACC? 7.73 percent 8.40 percent 8.00 percent 16.00 percent We commonly measure the risk-return relationship using which of the following? Coefficient of variation Standard deviation

  41. Expected returns Correlation coefficient Financial plans include which of the following? Schedule of Sales, Expenses, and Capital Expenditure All of the above Short Term and Long Term Plan Pro forma Income Statement, Balance Sheet Which of the following terms means that during periods when interest rates change substantially, bondholders experience distinct gains and losses in their bond investments? Interest rate risk Credit quality risk Reinvestment rate risk Liquidity rate risk What are reasons for the firm to go abroad? Access to raw materials

  42. Diversification Lower production cost All of the above Which of these statements is true regarding divisional WACC? Using a simple firmwide WACC to evaluate new projects would give an unfair advantage to projects that present more risk than the firm’s average beta. Using a divisional WACC versus a WACC for the firm’s current operations will result in quite a few incorrect decisions. Using a firmwide WACC to evaluate new projects would have no impact on projects that present less risk than the firm’s average beta. Using a simple firmwide WACC to evaluate new projects would give an unfair advantage to projects that present less risk than the firm’s average beta. The Rule of 72 is a simple mathematical approximation for__________. the number of years required to double an investment the payments required to double an investment the present value required to double an investment the number of years required to double an investment the future value required to double an investment

  43. We can estimate a stock’s value by__________. using the book value of the total stockholder equity section using the book value of the total assets divided by the number of shares outstanding discounting the future dividends and future stock price appreciation compounding the past dividends and past stock price appreciation Which of these is the process of estimating expected future cash flows of a project using only the relevant parts of the balance sheet and income statements? Substitutionary analysis Incremental cash flows Cash flow analysis Pro forma analysis Five years ago, Jane invested $5,000 and locked in an 8 percent annual interest rate for 25 years (ending 20 years from now). James can make a 20-year investment today and lock in a 10 percent interest rate. How

  44. much money should he invest now in order to have the same amount of money in 20 years as Jane? $7,346.64 $5,089.91 $3,160.43 $3,464.11 The overall goal of the financial manager is to__________. maximize net income maximize earnings per share maximize shareholder wealth minimize total costs Which of the following can create ethical dilemmas between corporate managers and stockholders? Auditors Board of directors Agency relationship Venture Capitalist

  45. A firm is expected to pay a dividend of $2.00 next year and $2.14 the following year. Financial analysts believe the stock will be at their target price of $75.00 in two years. Compute the value of this stock with a required return of 10 percent. $79.14 $65.40 $65.57 $66.67 Which financial statement shows the total revenues that a firm earns and the total expenses the firm incurs to generate those revenues over a specific period of time — generally one year? Statement of cash flows Statement of retained earnings Balance sheet Income statement Which of the following is a true statement? If interest rates fall, all bonds will enjoy rising values. If interest rates fall, corporate bonds will have decreasing values. If interest rates fall, no bonds will enjoy rising values.

  46. If interest rates fall, U.S. Treasury bonds will have decreasing values. ********************************************** FIN 370 Final Exam Guide (New, 100% score) For more classes visit www.snaptutorial.com Which one of the following statements is correct concerning the cash cycle? Accepting a supplier’s discount for early payment decreases the cash cycle. Increasing the accounts payable period increases the cash cycle. The longer the cash cycle, the more likely a firm will need external financing. The cash cycle can exceed the operating cycle if the payables period is equal to zero. Offering early payment discounts to customers will tend to increase the cash cycle. Precise Machinery is analyzing a proposed project. The company expects to sell 2100 units give or take 5 percent. The expected variable cost per unit is $260 and the expected fixed costs are $589,000. Cost

  47. estimates are considered accurate within a plus or minus 4 percent range. The depreciation expense is $129,000. The sales price is estimated at $750 per unit, give or take 2 percent. The tax rate is 35 percent. The company is conducting a sensitivity analysis on the sales price using a sales price estimate of $755. What is the operating cash flow based on this analysis? $86,675 $354,874 $368,015 $293,089 $337,975 You are doing some comparison shopping. Five stores offer the product you want at basically the same price but with differing credit terms. Which one of these terms is best-suited to you if you plan to forgo the discount? 2/10, net 30 2/5, net 30 2/5, net 20 1/10, net 45 1/5, net 15 The plowback ratio is: The dollar increase in net income divided by the dollar increase in sales.

  48. Equal to net income divided by the change in total equity. Equal to one minus the retention ratio. The change in retained earnings divided by the dividends paid. The percentage of net income available to the firm to fund future growth. Which one of the following is the financial statement that summarizes a firm’s revenue and expenses over a period of time? Statement of cash flows Market value report Tax reconciliation statement Balance sheet Income statement Kelly’s Corner Bakery purchased a lot in Oil City six years ago at a cost of $278000. Today, that lot has a market value of $264,000. At the time of the purchase, the company spent $6,000 to level the lot and another $8,000 to install storm drains. The company now wants to build a new facility on that site. The building cost is estimated at $1.03 million. What amount should be used as the initial cash flow for this project? -$1,294,000 -$1,322,000 -$1,045,000 -$1,308,000 -$1,308,000

  49. Webster United is paying a dividend of $1.32 per share today. There are 350,000 shares outstanding with a market price of $22.40 per share prior to the dividend payment. Ignore taxes. Before the dividend, the company had earnings per share of $1.68. As a result of this dividend, the: Retained earnings will decrease by $350,000. Earnings per share will increase to $3. Total firm value will not change. Price-earnings ratio will be 12.55. Retained earnings will increase by $462,000. The common stock of Dayton Repair sells for $43.19 a share. The stock is expected to pay $2.28 per share next year when the annual dividend is distributed. The firm has established a pattern of increasing its dividends by 2.15 percent annually and expects to continue doing so. What is the market rate of return on this stock? 7.67 percent 7.59 percent 7.43 percent 7.14 percent 7.28 percent Which one of the following should earn the most risk premium based on CAPM? Diversified portfolio with returns similar to the overall market. Stock with a beta of 1.38.

  50. Portfolio with a beta of 1.01. U.S. Treasury bill. Stock with a beta of 0.74. Which one of these actions will increase the operating cycle? Assume all else held constant. Decreasing the receivables turnover rate. Decreasing the payables period. Decreasing the average inventory level. Increasing the payables period. Increasing the inventory turnover rate. Oil Wells offers 6.5 percent coupon bonds with semiannual payments and a yield to maturity of 6.94 percent. The bonds mature in seven years. What is the market price per bond if the face value is $1,000? $902.60 $996.48 $913.48 $989.70 $975.93 Three Corners Markets paid an annual dividend of $1.37 a share last month. Today, the company announced that future dividends will be increasing by 2.8 percent annually. If you require a return of 11.6 percent, how much are you willing to pay to purchase one share of this stock today?

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