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##### Jack Robbins is saving for a new car

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Question;Present value: 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.);$19,444;$22,680;$26,454;$16,670;PV of multiple cash flows: Ferris;Inc., has borrowed from their bank at a rate of 8 percent and will repay the;loan with interest over the next five years. Their scheduled payments, starting;at the end of the year are as follows?$450,000, $560,000, $750,000, $875,000;and $1,000,000. What is the present value of these payments? (Round to the;nearest dollar.);$2,815,885;$2,615,432;$2,735,200;$2,431,224;PV of multiple cash flows: 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.);$477,235;$480,906;$429,560;$414,322;Future value of an annuity: Jayadev;Athreya has started on his first job. He plans to start saving for retirement;early. 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? (Round to the nearest dollar.);$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.);40%;12%;16%;32%;Bond price: 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.);$1,014;$1,066;$923;$972;PV of dividends: 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 is;14 percent, what is the present value of their dividends over the next four;years?;$13.50;$11.63;$9.72;$12.50;Capital rationing. 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?;1.90;1.11;0.11;0.90;What decision criteria should managers;use in selecting projects when there is not enough capital to invest in all;available positive NPV projects?;The internal rate of return.;The discounted payback.;The modified internal rate of return.;The profitability index.;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%;50%;30%;33%;The cost of equity: Gangland Water;Guns, Inc., is expected to pay a dividend of $2.10 one year from today. If the;firm's growth in dividends is expected to remain at a flat 3 percent forever;then what is the cost of equity capital for Gangland if the price of its common;shares is currently $17.50?;15.00%;14.65%;15.36%;12.00%;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;Must have preferred stock in its capital structure;Is financed with more than 50% debt;Is perceived to be safe;A firm's capital structure is the mix;of financial securities used to finance its activities and can include all of;the following except;stock.;bonds.;equity options.;preferred stock.;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 to 60 percent;equity and use the debt proceeds to pay a special dividend to shareholders, how;much debt should they issue?;$375;$225;$321;$600;Multiple Analysis: 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;$1,334 million;$453.6 million;$1,787 million;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?;27.3%;32.9%;25.1%;30.3%;Which of the following cannot be;engaged in managing the business?;a sole proprietor;none of these;a general partner;a limited partner;Which of the following does maximizing;shareholder wealth not usually account for?;Amount of Cash flows.;Government regulation.;The timing of cash flows.;Risk.;The strategic plan does NOT identify;the lines of business a firm will compete in.;major areas of investment in real assets.;future mergers, alliances, and divestitures.;working capital strategies.;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.;have a low plowback ratio.;are highly leveraged.;none of these.;Payout and retention ratio: Drekker;Inc., has revenues of $312,766, costs of $220,222, interest payment of $31,477;and a tax rate of 34 percent. It paid dividends of $34,125 to shareholders.;Find the firm's dividend payout ratio and retention ratio.;55%, 45%;15%, 85%;85%, 15%;45%, 55%;The cash conversion cycle;estimates how long it takes on average for the firm to;collect its outstanding accounts receivable balance.;shows how long the firm keeps its inventory before selling;it.;begins when the firm invests cash to purchase the raw;materials that would be used to produce the goods that the firm manufactures.;begins when the firm uses its cash to purchase raw;materials and ends when the firm collects cash payments on its credit sales.;You are provided the following working;capital information for the Ridge Company;Ridge Company;Account;$;Inventory;$12,890;Accounts receivable;12,800;Accounts payable;12,670;Net sales;$124,589;Cost of goods sold;99,630;Cash conversion cycle: What is the cash;conversion cycle for Ridge Company?;38.3 days;46.4 days;129.9 days;83.5 days

Paper#41015 | Written in 18-Jul-2015

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