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Question;Which;of the following is considered a hybrid organizational form?;a) limited;liability partnership;b) sole;proprietorship;c) corporation;d) partnership;Which;of the following is a principal within the agency relationship?;a) the;CEO of the firm;b) a;shareholder;c) a;company engineer;d) the;board of directors;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?;a) $1,844,022;b) $803,010;c) $2,303,010;d) $2,123,612;Which;of the following presents a summary of the changes in a firm?s balance sheet;from the beginning of an accounting period to the end of that accounting;period?;a) The;statement of retained earnings.;b) The;statement of cash flows.;c) The;statement of working capital.;d) The;statement of net worth.;Efficiency;ratio: Gateway Corp. has an inventory turnover ratio of 5.6. What is the firm's;days's sales in inventory?;a) 57.9;days;b) 65.2;days;c) 61.7;days;d) 64.3;days;Leverage;ratio: Your firm has an equity multiplier of 2.47. What is its debt-to-equity;ratio?;a) 1.74;b) 0.60;c) 1.47;d) 0;Which;of the following is not a method of ?benchmarking??;a) Evaluating;a single firm?s performance over time.;b) Identify;a group of firms that compete with the company being analyzed.;c) Conduct;an industry group analysis.;d) Utilize;the DuPont system to analyze a firm?s performance.;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.);a) $26,454;b) $16,670;c) $19,444;d) $22,680;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.);a) $2,815,885;b) $2,735,200;c) $2,615,432;d) $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.);a) $477,235;b) $480,906;c) $414,322;d) $429,560;Future;value of an annuity: JayadevAthreya 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.);a) $2,667,904;b) $1,745,600;c) $5,233,442;d) $3,594,524;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.);a) 40%;b) 12%;c) 16%;d) 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.);a) $1,066;b) $923;c) $972;d) $1,014;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?;a) $13.50;b) $9.72;c) $12.50;d) $11.63;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?;a) 1.90;b) 0.11;c) 0.90;d) 1.11;What;decision criteria should managers use in selecting projects when there is not;enough capital to invest in all available positive NPV projects?;a) The;modified internal rate of return.;b) The;profitability index.;c) The;internal rate of return.;d) The;discounted payback.;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?;a) 30%;b) 50%;c) 70%;d) 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?;a) 15.36%;b) 4.65%;c) 15.00%;d) 12.00%;If;a company's weighted average cost of capital is less than the required return;on equity, then the firm;a) Is;financed with more than 50% debt;b) Has;debt in its capital structure;c) Is;perceived to be safe;d) Must;have preferred stock in its capital structure;A;firm's capital structure is the mix of financial securities used to finance its;activities and can include all of the following except;a) stock.;b) bonds.;c) equity;options.;d) 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?;a) $375;b) $225;c) $321;d) $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.;a) $453.6;million;b) $1,787;million;c) $1,334;million;d) $1,315;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?;a) 27.3%;b) 30.3%;c) 32.9%;d) 25.1%;Which;of the following cannot be engaged in managing the business?;a) a;general partner;b) a;limited partner;c) a;sole proprietor;d) none;of these;Which;of the following does maximizing shareholder wealth not usually account for?;a) Risk.;b) The;timing of cash flows.;c) Amount;of Cash flows.;d) Government;regulation.;The;strategic plan does NOT identify;a) working;capital strategies.;b) major;areas of investment in real assets.;c) future;mergers, alliances, and divestitures.;d) the;lines of business a firm will compete in.;Firms;that achieve higher growth rates without seeking external financing;a) are;highly leveraged.;b) none;of these.;c) have;a low plowback ratio.;d) have;less equity and/or are able to generate high net income leading to a high ROE.;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;$34,125 to shareholders. Find the firm's dividend payout ratio and retention;ratio.;a) 15%;85%;b) 85%;15%;c) 45%;55%;d) 55%;45%;The;cash conversion cycle;a) shows;how long the firm keeps its inventory before selling it.;b) estimates;how long it takes on average for the firm to collect its outstanding accounts;receivable balance.;c) begins;when the firm uses its cash to purchase raw materials and ends when the firm;collects cash payments on its credit sales.;d) begins;when the firm invests cash to purchase the raw materials that would be used to;produce the goods that the firm manufactures.;Below;You are provided the following;working capital information for the Ridge Company;Ridge;Company;Account;$;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?;83.5 days;129.9 days;46.4 days;38.3 days


Paper#47434 | Written in 18-Jul-2015

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