Post FIn201 final exam

Post FIn201 final exam
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Question 1
If a firm has a debt-equity ratio of 1.0, then its total debt ratio must be which one of the following?
0.0 |
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0.5 |
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1.0 |
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1.5 |
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2.0 |
Question 2
A project has an initial cost of $27,400 and a market value of $32,600. What is the difference between these two values called?
net present value |
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internal return |
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payback value |
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profitability index |
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discounted payback |
Question 3
Which one of the following is defined as a firm's short-term assets and its short-term liabilities?
working capital |
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debt |
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investment capital |
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net capital |
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capital structure |
Question 4
According to the Rule of 72, you can do which one of the following?
double your money in five years at 7.2 percent interest |
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double your money in 7.2 years at 8 percent interest |
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double your money in 8 years at 9 percent interest |
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triple your money in 7.2 years at 5 percent interest |
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triple your money at 10 percent interest in 7.2 years |
Question 5
You cannot attend the shareholder's meeting for Alpha United so you authorize another shareholder to vote on your behalf. What is the granting of this authority called?
altering |
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cumulative voting |
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straight voting |
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indenture agreement |
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voting by proxy |
Question 6
Phil can afford $180 a month for 5 years for a car loan. If the interest rate is 8.6 percent, how much can he afford to borrow to purchase a car?
$7,750.00 |
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$8,348.03 |
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$8,752.84 |
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$9,266.67 |
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$9,400.00 |
Question 8
Rachel's has a $50,000 line of credit with Uptown Bank. The line of credit calls for an interest rate of 8 percent and a compensating balance of 4 percent. The compensating balance is based on the total amount borrowed and will be held in an interest-free account. What is the effective annual interest rate if the firm borrows $35,000 for one year?
7.76 percent |
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8.00 percent |
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8.17 percent |
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8.33 percent |
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8.42 percent |
Question 9
An amortized loan:
requires the principal amount to be repaid in even increments over the life of the loan. |
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may have equal or increasing amounts applied to the principal from each loan payment. |
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requires that all interest be repaid on a monthly basis while the principal is repaid at the end of the loan term. |
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requires that all payments be equal in amount and include both principal and interest. |
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repays both the principal and the interest in one lump sum at the end of the loan term. |
Question 10
Which one of the following terms is defined as the management of a firm's long-term investments?
working capital management |
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financial allocation |
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agency cost analysis |
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capital budgeting |
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capital structure |
1 points
Question 11
A loan where the borrower receives money today and repays a single lump sum on a future date is called a(n) _____ loan.
amortized |
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continuous |
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balloon |
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pure discount |
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interest-only |
Question 12
A monthly interest rate expressed as an annual rate would be an example of which one of the following rates?
stated rate |
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discounted annual rate |
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effective annual rate |
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periodic monthly rate |
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consolidated monthly rate |
Question 13
Which one of the following is a capital budgeting decision?
determining how many shares of stock to issue |
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deciding whether or not to purchase a new machine for the production line |
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deciding how to refinance a debt issue that is maturing |
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determining how much inventory to keep on hand |
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determining how much money should be kept in the checking account |
Question 14
Which of the following questions are addressed by financial
managers?
I. How should a product be marketed?
II. Should customers be given 30 or 45 days to pay for their credit purchases?
III. Should the firm borrow more money?
IV. Should the firm acquire new equipment?
I and IV only |
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II and III only |
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I, II, and III only |
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II, III, and IV only |
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I, II, III, and IV |
Question 15
Your grandmother has promised to give you $5,000 when you graduate from college. She is expecting you to graduate two years from now. What happens to the present value of this gift if you delay your graduation by one year and graduate three years from now?
remains constant |
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increases |
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decreases |
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becomes negative |
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cannot be determined from the information provided |
Question 16
Wayco Industrial Supply has a pre-tax cost of debt of 7.6 percent, a cost of equity of 14.3 percent, and a cost of preferred stock of 8.5 percent. The firm has 220,000 shares of common stock outstanding at a market price of $27 a share. There are 25,000 shares of preferred stock outstanding at a market price of $41 a share. The bond issue has a face value of $550,000 and a market quote of 101.2. The company's tax rate is 37 percent. What is the firm's weighted average cost of capital?
10.18 percent |
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10.84 percent |
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11.32 percent |
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12.60 percent |
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12.81 percent |
Question 17
The length of time between the purchase of inventory and the receipt of cash from the sale of that inventory is called the:
operating cycle. |
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inventory period. |
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accounts receivable period. |
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accounts payable period. |
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cash cycle. |
Question 18
The cash flow of a firm which is available for distribution to the firm's creditors and stockholders is called the:
operating cash flow. |
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net capital spending. |
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net working capital. |
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cash flow from assets. |
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cash flow to stockholders. |
Question 19
You are investing $100 today in a savings account at your local bank. Which one of the following terms refers to the value of this investment one year from now?
future value |
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present value |
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principal amounts |
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discounted value |
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invested principal |
Question 20
Wind Power Systems has 20-year, semi-annual bonds outstanding with a 5 percent coupon. The face amount of each bond is $1,000. These bonds are currently selling for 114 percent of face value. What is the company's pre-tax cost of debt?
3.98 percent |
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4.42 percent |
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4.71 percent |
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5.36 percent |
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5.55 percent |
Question 21
Shareholders' equity:
increases in value anytime total assets increases. |
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is equal to total assets plus total liabilities. |
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decreases whenever new shares of stock are issued. |
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includes long-term debt, preferred stock, and common stock. |
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represents the residual value of a firm. |
Question 22
Alex invested $10,500 in an account that pays 6 percent simple interest. How much money will he have at the end of four years?
$12,650 |
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$12,967 |
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$13,020 |
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$13,256 |
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$13,500 |
1 points
Question 23
Net working capital is defined as:
total liabilities minus shareholders' equity. |
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current liabilities minus shareholders' equity. |
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fixed assets minus long-term liabilities. |
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total assets minus total liabilities. |
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current assets minus current liabilities. |
Question 24
Which one of the following statements correctly states a relationship?
Time and future values are inversely related, all else held constant. |
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Interest rates and time are positively related, all else held constant. |
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An increase in the discount rate increases the present value, given positive rates. |
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An increase in time increases the future value given a zero rate of interest. |
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Time and present value are inversely related, all else held constant. |
Question 25
What is the net present value of a project that has an initial
cash outflow of $34,900 and the following cash inflows? The required return is
15.35 percent.
-$3,383.25 |
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-$2,784.62 |
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-$2,481.53 |
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$52,311.08 |
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$66,416.75 |
Question 26
An ordinary annuity is best defined by which one of the following?
increasing payments paid for a definitive period of time |
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increasing payments paid forever |
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equal payments paid at regular intervals over a stated time period |
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equal payments paid at regular intervals of time on an ongoing basis |
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unequal payments that occur at set intervals for a limited period of time |
Question 27
Which one of the following is a source of cash?
increase in accounts receivable |
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decrease in notes payable |
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decrease in common stock |
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increase in accounts payable |
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increase in inventory |
Question 28
The difference between the price that a dealer is willing to pay and the price at which he or she will sell is called the:
equilibrium. |
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premium. |
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discount. |
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call price. |
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spread. |
Question 29
You want to be on the board of directors of Wisely Foods. Since you are the only shareholder that will vote for you, you will need to own more than half of the outstanding shares of stock if you are to be elected to the board. What is the type of voting called that requires this level of stock ownership to be successfully elected under these conditions?
democratic |
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cumulative |
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straight |
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deferred |
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proxy |
Question 30
Question 31Question 32
Question 33Travis invested $9,250 in an account that pays 6 percent simple interest. How much more could he have earned over a 7-year period if the interest had compounded annually?
$741.41 |
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$773.58 |
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$802.16 |
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$833.33 |
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$858.09 |
1 points
Question 34
Question 35 Question 36 Question 371 points
Question 38
Question 39 Question 401 points
Question 41
Question 42 Question 43
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Rating:
5/
Solution: Post FIn201 final exam