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##### If a firm's payment terms for sales made on account to its customers were

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solution

**Question**

f a firm's payment terms for sales made on account to its customers were 2/10, n30, the number of days' sales in accounts receivable would be expected to be;A) less than 10.;B) between 10 and 25.;C) between 25 and 40.;D) over 40.;3.What percentage of the contribution margin is profit on units sold in excess of the breakeven point?;A) It's 50% to the contribution margin ratio.;B) It's equal to the variable cost ratio.;C) It's equal of the gross profit ratio.;D) It's 100%.;4.What is the cash conversion cycle for a firm with $3 million average inventories, $1.5 million average accounts payable, a receivables period of 40 days, and an annual cost of goods sold of $18 million?;A) 14.59 days;B) 46.25 days;C) 70.41 days;D) 136.25 days;5.Assume the total expense for your current year in college equals $20,000. Approximately how much would your parents have needed to invest 21 years ago in an account paying 8% compounded annually to cover this amount?;A) $ 952;B) $1,600;C) $1,728;D) $3,973;6.What is the rate of return for an investor who pays $1,054.47 for a three-year bond with a 7% coupon and sells the bond one year later for $1,037.19?;A) 5.00%;B) 5.33%;C) 6.46%;D) 7.00%;7.What is the required return for a stock that has a 5% constant growth rate, a price of $25, an expected dividend of $2, and a P/E ratio of 10?;A) 5%;B) 10%;C) 13%;D) 22%;8.A firm has an expected return on equity of 16% and an after-tax cost of debt of 8%. What debt-equity ratio should be used in order to keep the WACC at 12%?;A).50;B).75;C) 1.00;D) 1.50

Paper#26408 | Written in 18-Jul-2015

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