Question;Capstone Final Examination, Part 2;Jayadev Athreya has started his first job. He will invest $5,000;at the end of each year for the next 45 years in a fund that will earn a return;of 10 percent. How much will Jayadev have at the end of 45 years?;?;$3,594,524;?;$1,745,600;?;$5,233,442;?;$2,667,904;Serox stock was selling for $20 two years ago. The stock sold for $25;one year ago, and it is currently selling for $28. Serox pays a $1.10;dividend per year. What was the rate of return for owning Serox in the;most recent year? (Round to the nearest percent.);?;12%;?;40%;?;32%;?;16%;Gateway, Corp. has an inventory turnover of 5.6. What;is the firm?s days?s sales in inventory?;?;64.3;?;61.7;?;57.9;?;65.2;Which of the following financial statements is concerned with the;company at a point in time?;?;statement;of cash flows;?;balance sheet;?;retained;earnings statement;?;income;statement;The break-even point is where;?;total;sales equal total variable costs.;?;total;variable costs equal total fixed costs.;?;total;sales equal total fixed costs.;?;contribution margin equals total fixed;costs.;Process costing is used when;?;costs are;to be assigned to specific jobs.;?;production;is aimed at fulfilling a specific customer order.;?;dissimilar;products are involved;?;the production process is continuous.;The process of evaluating financial data that change under;alternative courses of action is called;?;incremental analysis;?;contribution;margin analysis;?;double;entry analysis;?;cost-benefit;analysis;Which of the following is considered a hybrid organizational form?;?;limited liability partnership;?;partnership;?;corporation;?;sole;proprietorship;Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its;depreciation and amortization expenses amounted to $84 million. The firm;has 135 million shares outstanding and a share price of $12.80. A competing;firm that is very similar to Turnbull has an enterprise value/EBITDA multiple;of 5.40.;What is the enterprise value of Turnbull Corp.? Round to the;nearest million dollars.;?;$1,315;million;?;$1,787 million;?;$1,344;million;?;$453.6;million;Your firm has an equity multiplier of 2.47. What is the;debt-to-equity ratio?;?;0.60;?;1.47;?;1.74;?;0;TuleTime Comics is considering a;new show that will generate annual cash flows of $100,000 into the infinite;future. If the initial outlay for such a production is $1,500,000 and the;appropriate discount rate is 6 percent for the cash flows, then what is the;profitability index for the project?;?;1.11;?;0.11;?;1.90;?;0.90;Regatta, Inc., has six-year bonds outstanding that pay a 8.25;percent coupon rate. Investors buying the bond today can expect to earn a yield;to maturity of 6.875 percent. What should the company?s bonds be priced at;today? Assume annual coupon payments. (Round to the nearest dollar.);?;$923;?;$972;?;$1,066;?;$1014;What decision criteria should managers use in selecting projects;when there is not enough capital to invest in all available positive NPV;projects?;?;the;discounted payback;?;the;modified internal rate of return;?;the;internal rate of return;?;the profitability index;If a company?s weighted average cost of capital is less than;the required return on equity, then the firm;?;has debt in its capital structure;?;is;perceived to be safe;?;partnership;?;is;financed with more than 50% debt;How firms estimate their cost of capital: The WACC for a firm is;13.00 percent. You know that the firm?s cost of debt capital is 10 percent and;the cost of equity capital is 20% What proportion of the firm is financed with;debt?;?;70%;?;30%;?;50%;?;33%;Which of the following presents a summary of changes in a firm?s;balance sheet from the beginning of an accounting period to the end of that;accounting period?;?;the;statement of working capital;?;the;statement of net worth;?;the statement of cash flows;?;the;statement of retained earnings;The cash conversion cycle?;?;shows how long the firm keeps its inventory before selling it.;?;begins when the firm uses;its cash to purchase raw materials and ends when the firm collects cash;payments on its credit sales.;?;begins when the firm invests cash to purchase the raw materials;that would be used to produce the goods that the firm manufactures.;?;estimates how long it takes on average for the firm to collect its;outstanding accounts receivables balance.;A cost which remains constant per;unit at various levels of activity is a;?;mixed cost;?;manufacturing cost;?;variable cost;?;fixed cost;The most important information needed to determine if companies;can pay their current obligations is the;?;relationship between current assets and;current liabilities;?;net;income for this year;?;projected;net income for next year;?;relationship;between short-term and long-term liabilities;Next year Jenkins Traders will pay a dividend of $3.00. It;expects to increase its dividend by $0.25 in each of the following three;years. If their required rate of return if 14 percent, what is the;present value of their dividends over the next four years?;?;$9.72;?;$13.50;?;$12.50;?;$11.63;In a process cost system, product costs are summarized;?;when the;products are sold.;?;on job cost;sheets.;?;on production cost reports.;?;after;each unit is produced.;Teakap, Inc. has current assets of $1,456,312 and total assets of;$4,812,369 for the year ending September 30, 2006. It also has current;liabilities of $1,041,012, common equity of $1,500,000 and retained earnings of;$1,468,347. How much long-term debt does the firm have?;?;$803,010;?;$2,123,612;?;$2,303,010;?;$1,844,022;An activity that has a direct cause-effect relationship with the;resources consumed is a(n);?;overhead;rate;?;product;activity;?;cost driver;?;cost pool;The accumulation of accounting data on the basis of the individual;manager who has the authority to make day-to-day decisions about activities in;an area is called;?;static;reporting;?;flexible;accounting;?;responsibility accounting;?;master;budgeting;The convention of consistency refers to consistent use of;accounting principles;?;among;firms;?;within;industries;?;throughout;the accounting period;?;among accounting periods;Ajax Corp. is expecting the following cash flows - $79,000, $112,000, $164,000;$84,000, and $242,000 ? over the next five years. If the company?s opportunity;cost is 15 percent, what is the present value of these cash flows? (Round to;the nearest dollar.);?;$429,560;?;$477,235;?;$414,322;?;$480,906;External financing needed: Jockey Company has total assets worth;$4,417,665. At year-end it will have net income of $2,771,342 and pay out 60;percent as dividends. If the firm wants no external financing, what is the growth;rate it can support?;?;32.9%;?;27.3%;?;25.1%;?;30.3%;Internal reports that review the actual impact of decisions are;prepared by;?;the;controller;?;management accountants;?;factory;workers;?;department;heads;Jack Robbins is saving for a new car. He needs to have $21,000 for;the car in three years. How much will he have to invest today in an account;paying 8 percent annually to achieve his target? (Round to nearest dollar);?;$26,454;?;$19,444;?;$22,680;?;$16,670;The major element in budgetary;control is;?;the preparation of long-term plans;?;the approval of the budget by the stockholders;?;the comparison of actual;results with planned objectives.;?;the valuation of inventories;Firms that achieve higher growth;rates without seeking external financing;?;have less equity and/or are;able to generate high net income leading to a high ROE.;?;are highly leveraged;?;Have a low plowback ratio;?;None of these;The group of users of accounting information charged with achieving the goals;of the business is its;?;investors;?;managers;?;creditors;?;auditors;M&M Proposition 1: Dynamo Corp. produces annual cash flows of;$150 and is expected to exist forever. The company is currently financed with;75 percent equity and 25 percent debt. Your analysis tells you that the;appropriate discount rates are 10 percent for the cash flows, and 7 percent for;the debt. You currently own 10 percent of the stock.;If Dynamo wishes to change its capital structure from 75 percent;equity to 60 percent equity and use the debt proceeds to pay a special dividend;to shareholders, how much debt should they use?;?;$321;?;$375;?;$225;?;$600;34;Which of the following is an advantage of corporations relative to;partnerships and sole proprietorships?;?;harder to;transfer ownership;?;most;common form of organization;?;lower;taxes;?;reduced legal liability for investors;When a company assigns the costs of direct materials, direct;labor, and both variable and fixed manufacturing overhead to products, that;company is using;?;operations;costing;?;absorption costing;?;product;costing;?;variable;costing;An unrealistic budget is more;likely to result when it;?;has been developed by all levels of management.;?;has been developed in a top;down fashion.;?;is developed with performance appraisal usages in mind.;?;has been developed in a bottom up fashion.;Horizontal analysis is also known as;?;linear;analysis;?;vertical;analysis;?;trend analysis;?;common;size analysis;8;Variance reports are;?;internal reports for management;?;SEC;financial reports;?;external;financial reports;?;all of;these;Horizontal analysis is a technique for evaluating a series of;financial statement data over a period of time;?;that has;been arranged from the lowest number to the highest number.;?;that has;been arranged from the highest number to the lowest number.;?;to determine the amount and/or;percentage increase or decrease that has taken place.;?;to;determine which items are in error.
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