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Question 1 (True/False Worth 5 points) In comp...

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Question 1 (True/False Worth 5 points) In computing the present and future value of multiple cash flows, each cash flow is discounted or compounded at the same rate. True False Question 2 (True/False Worth 5 points) The constant-growth dividend model cannot be used if the growth in dividends is expected to be zero into the identifiable future. True False Question 3 (Multiple Choice Worth 5 points) Sao Paulo Sporting Goods is getting ready to produce a new line of soccer equipment by investing $1.5 million. The investment will result in additional cash flows of $435,000, $782,500, and $1,000,000 over the next three years. What is the payback period for this project? 3 years 2.3 years 1.6 years more than 3 years Question 4 (Multiple Choice Worth 5 points) Which of the following tools would be most appropriate for understanding which of two stocks to invest in a single holding portfolio? the coefficient of variation for each of the two stocks the correlation coefficient between the two stocks the covariance between the two stocks the beta of the two stocks Question 5 (True/False Worth 5 points) Multiples analysis is a market approach to valuing a business. True False Question 6 (True/False Worth 5 points) The APR is the annualized interest rate using compound interest. True False Question 7 (True/False Worth 5 points) Investment banks are large commercial banks located in major U.S. financial centers that transact in both the national and international money markets. True False Question 8 (Multiple Choice Worth 5 points) The financial plan addresses the following issue(s): Where is the company headed? What capital resources does the management need to get there? How is the firm going to pay for the resources needed? All of the above. Question 9 (Multiple Choice Worth 5 points) ______________ provides an estimate of the expected cash flows as well as information on the distribution of the cash flows that the project is likely to produce. Simulation analysis Sensitivity analysis Scenario analysis None of the above Question 10 (Multiple Choice Worth 5 points) Andrade Corp has debt of $2,834,950, total assets of $5,178,235, sales of $8,234,121, and net income of $812,355. What is the firm?s return on equity? 7.1% 34.7% 28.1% None of the above Question 11 (True/False Worth 5 points) Firms generally issue publicly traded shares for a specific project. True False Question 12 (Multiple Choice Worth 5 points) The process of converting future cash flows to its present value is time value of money discounting compounding none of the above Question 13 (True/False Worth 5 points) The largest noncash charges are depreciation and amortization expenses. True False Question 14 (Multiple Choice Worth 5 points) The value of a business is determined by the magnitude of the cash flows that it is expected to produce. the timing of those cash flows. the likelihood that the cash flows will be realized. All of the above. Question 15 (Multiple Choice Worth 5 points) The Rule of 72 is a rule that can be used to determine the amount of time it takes to double an investment. is fairly accurate for interest rates between 25 and 50 percent. states that the time to double your money (TDM) approximately equals 72/I, where 72 represents the years it takes to double your investment. None of the above. Question 16 (Multiple Choice Worth 5 points) An underlying assumption of the text is That most people who start a business do so to avoid unemployment taxes. That most people who start a business do so because they want to increase their wealth. That everyone starts a business to contribute to the GDP of the nation a and b Question 17 (Multiple Choice Worth 5 points) Calculating the present and future values of multiple cash flows is relevant for businesses only. for individuals only. for both individuals and businesses. None of the above. Question 18 (True/False Worth 5 points) Compound interest consists of both simple interest and interest on interest. True False Question 19 (True/False Worth 5 points) Capital budgeting projects may be classified as independent, mutually exclusive, or contingent. True False Question 20 (True/False Worth 5 points) Bonds with a call provision sell at lower market yields than comparable noncallable bonds. True False

 

Paper#3792 | Written in 18-Jul-2015

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