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Question 1 (True/False Worth 5 points) A finan...

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Question 1 (True/False Worth 5 points) A financial investor is one who is interested in buying the firm. True False Question 2 (True/False Worth 5 points) External funding needed (EFN) is defined as the additional debt or equity a firm needs to issue so that it can purchase additional assets to support an increase in sales. True False Question 3 (Multiple Choice Worth 5 points) Different organizational forms include all but C-corporations S-corporations Z-corporations Partnerships Question 4 (True/False Worth 5 points) All companies, both public and private, are required to file audited financial statements with the SEC. True False Question 5 (Multiple Choice Worth 5 points) Mercantile Co. has net income of $3,413,500 on assets of $16,109,445 and retains 55 percent of its income every year. What is the company?s internal growth rate? 21.2% 8.6% 11.7% 9.4% Question 6 (True/False Worth 5 points) The higher a firm?s plowback ratio, the higher the firm?s sustainable growth rate. True True False Question 7 (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 8 (Multiple Choice Worth 5 points) The Highway 66 Motel has net income of $866,500 on assets of $2,337,682 and retains 40 percent of its income every year. What is the company?s internal growth rate? 21.2% 8.6% 14.83% 9.4% Question 9 (True/False Worth 5 points) A business plan communicates the entrepreneur?s ideas to managers, outside directors, customers, suppliers, and others. True False Question 10 (True/False Worth 5 points) The higher a firm?s dividend payout ratio, the higher the firm?s internal growth rate. True False Question 11 (True/False Worth 5 points) Capital intensity measures the dollar amount of total assets needed to generate a dollar of sales. True False Question 12 (Multiple Choice Worth 5 points) If Charter Corp. has a ROE of 15.7 percent and a dividend payout ratio of 50 percent, what is its sustainable growth rate? 7.4% 31.4% 31.4% 7.85% Question 13 (True/False Worth 5 points) Multiples analysis is a market approach to valuing a business. True False Question 14 (Multiple Choice Worth 5 points) The free cash flow to equity (FCFE) approach uses only the portion of the cash flows that are available for distribution to bondholders. for distribution to bondholders and stockholders. for distribution to stockholders. None of the above. Question 15 (Multiple Choice Worth 5 points) An S-corporation can have no more than 100 stockholders. only one class of common stock. only individuals who are U.S. citizens or residents as stockholders. All of the above are true. Question 16 (True/False Worth 5 points) While sales are often correlated to the regional or national economy, it is not necessary to incorporate macroeconomic forecasts into the model. True False Question 17 (Multiple Choice Worth 5 points) A firm paid out $163,961.60 as dividends on net income of $298,112. What is the firm?s retention ratio? 55% 45% 50% None of the above. Question 18 (Multiple Choice Worth 5 points) If Newell Corp. has a ROE of 18.6 percent and a dividend payout ratio of 60%, what is its sustainable growth rate? 7.44% 2.15% 0.47% 8.2% Question 19 (True/False Worth 5 points) Business valuation methods include cost approaches, market approaches, and discount approaches. True False Question 20 (Multiple Choice Worth 5 points) When using the income approach to valuing a business, it is important to remember that it is difficult to estimate the life of a business. businesses often have cash or other assets that are not necessary for operations that can complicate the valuation. both a and b. None of the above.

 

Paper#3795 | Written in 18-Jul-2015

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