Finance Multiple Choice Questions

1. (TCO E) Which of the following correctly completes this sentence? “The value of any asset is the __________________ of all future cash flows it is expected to provide.” (Points : 5)
liquidation value
book value
future value
present value
market value



2. (TCO A) Which is the correct sequence of financing for the last three stages of a venture? (Points : 5)
First-round financing, additional financing such as an IPO, seasoned financing
Startup financing, first-round financing, seasoned financing
Venture financing, follow-on financing, seasoned financing
Bank financing, operational financing, venture lease financing


3. (TCO A) During the rapid-growth stage of a venture’s life cycle, the primary source(s) of funds are (Points : 5)
investment bankers, business angles, and business operations.
business operations, venture capitalists, business angles, and suppliers and customers.
business operations, government assistance, suppliers and customers, and venture capitalists.
commercial banks, investment bankers, business operations, and suppliers and customers.
None of the above


4. (TCO C) EBDAT is equal to which of the following? (Points : 5)
Revenues – variable costs – cash fixed costs
Revenues + variable costs + cash fixed costs
Revenues – total costs + ending cash balance
Revenues + variable costs – cash fixed costs
Revenues – variable costs – total fixed costs


5. (TCO G) Growing ventures seeking loans specifically to acquire fixed assets such as machinery would access this type of funding through which of the following U.S. Government Small Business Administration programs? (Points : 5)
The 7(a) program
The 504 program
A Community Development Financial Institution (CDFI)
A private SBIC


6. (TCO F) HausBier Brewery licenses beer-brewing technology that produces 300% of the amount of beer from the same amount of hops as standard processes. This promising technology is intoxicating to investors who seek to buy the firm’s stock in its first capital-raising campaign. If HausBier Brewery had an enterprise value of $10 million before investors make a $4 million investment (expecting a 50% return), what will the firm’s post-money valuation be? (Points : 5)
$16 million
$6 million
$12 million
$22.5 million
$14 million


7. (TCO B) Which form of business organization typically offers the easiest transfer of ownership? (Points : 5)
Proprietorship
Limited partnership
Corporation
Subchapter S corporation
General partnership


8. (TCO B) Which form of business organization is characterized as having unlimited life? (Points : 5)
Proprietorship
Limited partnership
Limited liability corporation
Subchapter S corporation
General partnership