FIN 571 Final Exam Newest Assignment

1. FIN 571 Final Exam (Newest) – Assignment • By http://www.TransWebeTutors.com/ Copyright All Rights Reserved by http://www.transwebetutors.com/

2. 1. In a general partnership, the general partners have _____ liability and have _____ control over day-to-day operations. • limited; no • no; total • unlimited; no • limited; total • unlimited; total 2. Which one of these is a correct definition? • Long-term debt is defined as a residual claim on a firm’s assets. • Net working capital equals current assets plus current liabilities. • Current liabilities are debts that must be repaid in 18 months or less. • Tangible assets are fixed assets such as patents. • Current assets are assets with short lives, such as inventory. • 3. The owners of a limited liability company generally prefer: • being taxed personally on all business income. • having liability exposure similar to that of a general partner. • having liability exposure similar to that of a sole proprietor. • being taxed like a corporation. • being taxed like a corporation with liability like a partnership. Copyright All Rights Reserved by http://www.transwebetutors.com/

3. 4. Which one of the following is least apt to help convince managers to work in the best interest of the stockholders?pay raises based on length of service • implementation of  a stock option plan • threat of a proxy fight • management compensation tied to the market value of the firm’s stock • threat of a takeover of the firm by unsatisfied stockholders 5. a. Compute the future value of $2,000 compounded annually for 20 years at 4 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)   Future value                    $_________ b. Compute the future value of $2,000 compounded annually for 15 years at 10 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)   Future value                    $_________ c. Compute the future value of $2,000 compounded annually for 25 years at 4 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)   Future value                    $_________ Find the final exam answers here just a click away FIN 571 Final Exam Answers (Newest) Copyright All Rights Reserved by http://www.transwebetutors.com/

4. 6. For each of the following, compute the present value (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.): Present Value   Years        Interest Rate      Future value    $_________         14                        8 %                 $15,551                  $_________         5                      14                   $52,557                 $_________         30                      15                   $887,073                $_________         35                       8                     $551,164                7. First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City Bank pays 8 percent interest compounded annually. If you made a $74,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 8 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)  Difference in accounts                  $_________ • 8. Winslow, Inc. stock is currently selling for $40 a share. The stock has a dividend yield of 3.8 percent. How much dividend income will you receive per year if you purchase 500 shares of this stock? • $1,053 • $152 • $190 • $329 • $760 Copyright All Rights Reserved by http://www.transwebetutors.com/

5. 9. You bought 360 shares of stock at a total cost of $7,754.40. You received a total of $403.20 in dividends and sold your shares for $19.98 a share. What was your total rate of return? • 5.38% • 7.24% • -1.29% • 3.67% • -2.04% 10. According to generally accepted accounting principles (GAAP), revenue is recognized as income when: • income taxes are paid on the revenue earned. • the transaction is complete and the goods or services are delivered. • a contract is signed to perform a service or deliver a good. • payment is requested. • managers decide to recognize it. Click here to download Final Exam Answers of FIN 571 Final Exam Copyright All Rights Reserved by http://www.transwebetutors.com/

6. 11. Sankey, Inc., has current assets of $4,230, net fixed assets of $25,700, current liabilities of $3,500, and long-term debt of $14,400. (Do not round intermediate calculations.) What is the value of the shareholders' equity account for this firm? Shareholders' equity      $_________ How much is net working capital? Net working capital         $_________ 12. The financial statement summarizing a firm's accounting performance over a period of time is the: • statement of equity.. • income statement. • tax reconciliation statement. • balance sheet. • statement of cash flows. • 13. Net working capital is defined as: • current assets minus current liabilities. • total assets minus total liabilities.  • fixed assets minus long-term liabilities. • current assets plus stockholders' equity. • current assets plus fixed assets. Copyright All Rights Reserved by http://www.transwebetutors.com/

7. 14. Jessica's Boutique has cash of $59, accounts receivable of $62, accounts payable of $210, and inventory of $140. What is the value of the quick ratio? • .30 • 1.82 • .67  • .58 • 1.24 15. Al's Sport Store has sales of $2,940, costs of goods sold of $2,090, inventory of $526, and accounts receivable of $445. How many days, on average, does it take the firm to sell its inventory assuming that all sales are on credit? • 90.6 • 65.3 • 119.9  • 91.9 • 120.4 Click here to download the complete course of FIN 571 Copyright All Rights Reserved by http://www.transwebetutors.com/

8. 16. Galaxy United, Inc.2009 Income Statement($ in millions)  Net sales                                                                             $8,550     Less: Cost of goods sold                                                     7,150     Less: Depreciation                                                                410     Earnings before interest and taxes                                    990     Less: Interest paid                                                                  82     Taxable Income                                                                      908     Less: Taxes                                                                              318     Net income                                                                          $590     Galaxy United, Inc.2008 and 2009 Balance Sheets($ in millions)                                  2008                       2009                                                   2008                 2009 Cash                      $120                       $140        Accounts payable          $1,120              $1,130    Accounts rec.     940                         790           Long-term debt              990                    1,201    Inventory            1,480     1,520      Common stock               $3,140              $2,940    Sub-total             $2,540                   $2,450    Retained earnings          510                     799    Net fixed assets   3,220                    3,620 Total assets        $5,760                   $6,070    Total liab. & equity        $5,760            $6,070    What is the return on equity for 2009? • 14 percent • 17 percent • 11 percent  • 16 percent • 19 percent Copyright All Rights Reserved by http://www.transwebetutors.com/

9. 17. Reliable Cars has sales of $3,790, total assets of $3,350, and a profit margin of 5 percent. The firm has a total debt ratio of 41 percent. What is the return on equity? • 9.59 percent  • 12.20 percent • 13.80 percent • 8.47 percent • 5.66 percent 18. A firm has a debt-equity ratio of .41. What is the total debt ratio? • 1.44 • .31  • .29  • 1.41 • .69 Copyright All Rights Reserved by http://www.transwebetutors.com/

10. 19. The return on equity can be calculated as: • ROA × Equity multiplier.  • ROA × Debt-equity ratio. • ROA ×(Net income / Total assets). • Profit margin × ROA × Total asset turnover. • Profit margin × ROA. 20. One of the primary weaknesses of many financial planning models is that they: • rely too much on financial relationships and too little on accounting relationships. • are iterative in nature. • ignore the goals and objectives of senior management. • ignore cash payouts to stockholders.  • ignore the size, risk, and timing of cash flows. To download Final Exam Questions and Answers just a click away FIN 571 Final Exam Questions and Answers Copyright All Rights Reserved by http://www.transwebetutors.com/

11. 21. In the financial planning model, the external financing needed (EFN) as shown on a pro forma balance sheet is equal to the changes in assets: • minus the change in retained earnings.  • minus the changes in both liabilities and equity. • minus the changes in liabilities. • plus the changes in both liabilities and equity. • plus the changes in liabilities minus the changes in equity. 22. The Wintergrass Company has an ROE of 15.1 percent and a payout ratio of 40 percent. What is the company’s sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Sustainable growth rate                                _________% • 23. Assume the following ratios are constant: •   Total asset turnover                    2.50 •   Profit margin                                   5.4% •   Equity multiplier                            1.30        •   Payout ratio                                     35% • What is the sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) •  Sustainable growth rate               _________% Copyright All Rights Reserved by http://www.transwebetutors.com/

12. 24. The length of time between the acquisition of inventory and its sale is called the: • cash cycle. • accounts payable period. • accounts receivable period.  • inventory period. • operating cycle. 25. A prearranged, short-term bank loan made on a formal or informal basis, and typically reviewed for renewal annually, is called a: • compensating balance. • cleanup loan. • roll-over.  • line of credit. • letter of credit. Want to download the Complete Assignment..?? Click FIN 571 Complete Assignment Copyright All Rights Reserved by http://www.transwebetutors.com/

13. 26. Here are the most recent balance sheets for Country Kettles, Inc. Excluding accumulated depreciation, determine whether each item is a source or a use of cash, and the amount. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32. Input all amounts as positive values): COUNTRY KETTLES, INC.Balance SheetDecember 31, 2016                                                                                 2015                                                      2016         Assets                                                                                    Cash                                                                    $31,800                                $31,030   Accounts receivable                                     71,300                                                   74,560     Inventories                                                      62,200                                                  64,625     Property, plant, and equipment              161,000                                172,600     Less: Accumulated depreciation            (47,040)                                              (51,300)                                                Total assets                                                     $279,260                                             $291,515                                 Liabilities and Equity                                                                                        Accounts payable                                          $46,300                                $48,530   Accrued expenses                                        7,680                                                    6,740       Long-term debt                                             27,000                                                  30,100     Common stock                                                30,000                                                  35,400     Accumulated retained earnings               168,280                                               170,745                    Total liabilities and equity                       $279,260                                             $291,515                Item                                                               Source/Use                       Amount                 Cash                                                                                                                    $_________       Accounts receivable                                                                                      $_________       Inventories                                                                                                        $_________      Property, plant, and equipment                                                                                $_________      Accounts payable                                                                                            $_________      Accrued expenses                                                                                           $_________      Long-term debt                                                                                                                $_________      Common stock                                                                                                  $_________      Accumulated retained earnings                                                                 $_________      Copyright All Rights Reserved by http://www.transwebetutors.com/

14. 27. Consider the following financial statement information for the Rivers Corporation:   Item                                                    Beginning                                           Ending    Inventory                                          $10,900                                                 $11,900                     Accounts receivable                    5,900                                                     6,200         Accounts payable                         8,100                                                     8,500         Net sales                                                                       $89,000                                                    Cost of goods sold                                                     69,000                                                   Calculate the operating and cash cycles. (Use 365 days a year. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)   Operating cycle                _________days    Cash cycle                          _________days  • 28. The _____ premium is that portion of the bond yield that represents compensation for potential difficulties that might be encountered should the bond holder wish to sell the bond prior to maturity. • default risk  • liquidity • taxability • inflation • interest rate risk Copyright All Rights Reserved by http://www.transwebetutors.com/

15. 29. How much are you willing to pay for one share of stock if the company just paid an annual dividend of $1.03, the dividends increase by 3 percent annually, and you require a rate of return of 15 percent? • $8.84  • $6.87 • $9.49 • $10.40 • $8.58 30. The rate at which a stock's price is expected to appreciate (or depreciate) is called the _____ yield. • total  • capital gains • current • earnings • dividend Download now complete course just a click away FIN 571 Entire Course Copyright All Rights Reserved by http://www.transwebetutors.com/

16. 31. Which one of these applies to the dividend growth model of stock valuation? • The rate of growth must be positive. • The model cannot be applied if the growth rate is zero. • The dividend must be for the same time period as the stock price. • The dividend amount must be constant over time.  • The growth rate must be less than the discount rate. 32. You are given the following information for Huntington Power Co. Assume the company’s tax rate is 40 percent. Debt:                                     8,000 6.9 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 105 percent of par; the bonds make semiannual payments. Common stock:           410,000 shares outstanding, selling for $59 per share; the beta is 1.15. Market:                              9 percent market risk premium and 4.9 percent risk-free rate. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)   WACC                 _________% Copyright All Rights Reserved by http://www.transwebetutors.com/

17. 33. Filer Manufacturing has 7.7 million shares of common stock outstanding. The current share price is $47, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $68.8 million and a coupon rate of 6.4 percent and sells for 108.9 percent of par. The second issue has a face value of $58.8 million and a coupon rate of 6.9 percent and sells for 107.7 percent of par. The first issue matures in 9 years, the second in 26 years. Suppose the company’s stock has a beta of 1.3. The risk-free rate is 2.5 percent, and the market risk premium is 6.4 percent. Assume that the overall cost of debt is the weighted average implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 40 percent. What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC                   _________%  Copyright All Rights Reserved by http://www.transwebetutors.com/

18. 34. A firm’s WACC can be correctly used to discount the expected cash flows of a new project when that project: • has the same level of risk as the firm’s current operations.  • will be financed solely with new debt and internal equity. • will be financed with the same proportions of debt and equity as those currently used by the overall firm. • will be managed by the firm’s current managers. • will be financed solely with internal equity. 35. When computing WACC, you should use the: • pretax yield to maturity because it considers the current market price of debt. • pretax cost of debt because it is the actual rate the firm is paying bondholders. • pretax cost of debt because most corporations pay taxes at the same tax rate. • current yield because it is based on the current market price of debt.  • aftertax cost of debt because interest is tax deductible. Want help? Click to download UOP Online HomeWork Help Copyright All Rights Reserved by http://www.transwebetutors.com/

19. 36. The CAPM has an advantage over DDM because the CAPM: • ignores changes in the overall market over time. • is more simplistic. • specifically considers a firm’s degree of operating leverage. • applies to firms that pay dividends.  • explicitly adjusts for risk. 37. The net present value method of capital budgeting analysis does all of the following except: • consider all relevant cash flow information.  • provide a specific anticipated rate of return. • use all of a project's cash flows. • discount all future cash flows. • incorporate risk into the analysis. 38. Lee's Furniture just purchased $24,000 of fixed assets that are classified as 5-year MACRS property. The MACRS rates are 20 percent, 32 percent, 19.2 percent, 11.52 percent, 11.52 percent, and 5.76 percent for Years 1 to 6, respectively. What is the amount of the depreciation expense for the third year? • $4,800 • $2,507  • $4,608 • $2,765 • $2,304 Copyright All Rights Reserved by http://www.transwebetutors.com/

20. 39. Jamestown Ltd. currently produces boat sails and is considering expanding its operations to include awnings. The expansion would require the use of land the firm purchased three years ago at a cost of $142,000 that is currently valued at $137,500. The expansion could use some equipment that is currently sitting idle if $6,700 of modifications were made to it. The equipment originally cost $139,500 six years ago, has a current book value of $24,700, and a current market value of $39,000. Other capital purchases costing $780,000 will also be required. What is the amount of the initial cash flow for this expansion project? • $963,200  • $948,900 • $927,800 • $962,300 • $953,400 40. If you want to review a project from a benefit-cost perspective, you should use the _______ method of analysis. • internal rate of return  • profitability index • net present value • payback • discounted payback • Download complete answers here…? click FIN 571 Final Exam (Newest) Assignment Copyright All Rights Reserved by http://www.transwebetutors.com/

21. 41. The profitability index of an investment project is the ratio of the: • net present value of every project cash flow to the initial cost. • net present value of the project’s cash outflows divided by the net present value of its inflows. • internal rate of return to the current market rate of interest.  • present value of the Time 1 and subsequent cash flows to the initial cost. • average net income to the average investment. 42. A project costing $6,200 initially should produce cash inflows of $2,860 a year for three years. After the three years, the project will be shut down and will be sold at the end of Year 4 for an estimated net cash amount of $3,300. What is the net present value of this project if the required rate of return is 11.3 percent? • $2,903.19  • $2,474.76 • $935.56 • $1,980.02 • $3,011.40 Copyright All Rights Reserved by http://www.transwebetutors.com/

22. 43. Wilson’s Market is considering two mutually exclusive projects that will not be repeated. The required rate of return is 13.9 percent for Project A and 12.5 percent for Project B. Project A has an initial cost of $54,500, and should produce cash inflows of $16,400, $28,900, and $31,700 for Years 1 to 3, respectively. Project B has an initial cost of $69,400, and should produce cash inflows of $0, $48,300, and $42,100, for Years 1 to 3, respectively. Which project, or projects, if either, should be accepted and why? • Project B; because it has the largest total cash inflow • Project A; because it has the higher required rate of return • Project B; because it has a negative NPV which indicates acceptance • neither project; because neither has an NPV equal to or greater than its initial cost  • Project A; because its NPV is positive while Project B’s NPV is negative • 44. What is the net present value of a project that has an initial cash outflow of $7,670 and cash inflows of $1,280 in Year 1, $6,980 in Year 3, and $2,750 in Year 4? The discount rate is 12.5 percent. • $270.16  • $86.87 • $68.20 • $371.02 • $249.65 Copyright All Rights Reserved by http://www.transwebetutors.com/

23. 45. A proposed project costs $300 and has cash flows of $80, $200, $75, and $90 for Years 1 to 4, respectively. Because of its high risk, the project has been assigned a discount rate of 16 percent. In dollars, how much will this project return in today’s dollars for every $1 invested? • $.99 • $1.01  • $1.05 • $.97 • $1.03 • About Author: • This article covers the topic for the University Of Phoenix FIN 571 Final Exam (Newest). The author is working in the field of education from last 5 years. This article covers the basic of FIN 571 Complete Course from UOP. Other topics in the class are as follows: • FIN 571 Final Exam (Newest) Assignment • Want to check other classes..?? Visit http://www.transwebetutors.com/ Copyright All Rights Reserved by http://www.transwebetutors.com/