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##### FIN 571 SAMPLE QUIZ

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Question;FIN 571 SAMPLE QUIZ;Week 1 Quiz;1. Which of the following business;organizational forms subjects the owner(s) to unlimited liability?;2. Which of the following business;organizational forms is easiest to raise capital?;3. Which organizational form best enables;the owners of the firm to monitor the actions of other owners of the same firm?;4. Which of the following factors or;activities can be controlled by the management of the firm?;5. The legal system and market forces;impose substantial costs on individuals and institutions that engage in;unethical behavior. Which of the following would not be an example of the;above?;6. The most common reason that corporate;firms use the futures and options markets is;7. Galan Associates prepared its financial;statement for 2008 based on the information given here. The company had cash;worth $1,234, inventory worth $13,480, and accounts receivables of;$7,789. The company's net fixed assets are $42,331, and other;assets are $1,822. It had accounts payables of $9,558, notes;payables of $2,756, common stock of $22,000, and retained earnings;of $14,008. How much long-term debt does the firm have?;8. Tre-Bien Bakeries generated net income;of $233,412 this year. At year end, the company had;accounts receivables of $47,199, inventory;of $63,781, and cash of $21,461. It also had accounts payables of $51,369;short-term notes payables of $11,417, and accrued taxes of $6,145. The net;working capital of the firm is;9.;Which of the following best represents cash flows to investors?;Week 2 Quiz;1. Which one of the following statements;about trend analysis is NOT correct?;2. Coverage;ratios;Sectors, Inc., has an EBIT of $7,221,643 and interest expense of $611,800. Its;depreciation for the year is $1,434,500. What is its cash coverage ratio?;3. Multiples;analysis;Turner Corp. has debt of $230 million and generated a net income of $121;million in the last fiscal year. In attempting to determine the total value of;the firm, an investor identified a similar firm in Jacobs, Inc., an all-equity;firm. This firm had 150 million shares outstanding, a share price of $14.25;and net income of $182 million. What is the total value of Turner Corp.? Round;to the nearest million dollars;4. Coverage ratios, like times interest;earned and cash coverage ratio, allow;5. Peer group analysis can be performed by;6.;Efficiency ratio:If Viera, Inc., has an accounts receivable;turnover of 3.9 times and net sales of $3,436,812, what is its level of;receivables?;Week 3 Quiz;1. You are provided the following working;capital information for the Ridge Company;Operating cycle: What is the operating cycle for Ridge Company?;2. The operating cycle;3. Ticktock Clocks sells 10,000 alarm clocks each;year. If the total cost of placing an order is $65 and it costs $85 per year to;carry the alarm clock in inventory, use the EOQ formula to calculate the;optimal order size.;4. The asset substitution problem occurs when;5. 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.;How much are your cash flows today?;6. Melba's Toast has a capital structure with 30% debt;and 70% equity. Its pretax cost of debt is 6%, and its cost of equity is 10%.;The firm's marginal corporate income tax rate is 35%. What is the appropriate;WACC?;7. According to the text, the financial plan covers a;period of;8. The financing plan of a firm will indicate;9. Tradewinds Corp. has revenues of $9,651,220, costs;of $6,080,412, interest payment of $511,233, and a tax rate of 34 percent. It;paid dividends of $1,384,125 to shareholders. Find the firm's dividend payout;ratio and retention ratio.;Week 4 Quiz;1.;Present value: Tommie Harris is considering an investment that pays 6.5;percent annually. How much must he invest today such that he will have $25,000;in seven years? (Round to the nearest dollar.);2.;PV of multiple cash flows: Jack Stuart has loaned money to his brother;at an interest rate of 5.75 percent. He expects to receive $625, $650, $700;and $800 at the end of the next four years as complete repayment of the loan;with interest. How much did he loan out to his brother? (Round to the nearest;dollar.);3.;PV of multiple cash flows: Hassan Ali has made an investment that will;pay him $11,455, $16,376, and $19,812 at the end of the next three years. His;investment was to fetch him a return of 14 percent. What is the present value;of these cash flows? (Round to the nearest dollar.);4. PV of;multiple cash flows: Pam Gregg is expecting cash flows of $50,000, $75,000;$125,000, and $250,000 from an inheritance over the next four years. If she can;earn 11 percent on any investment that she makes, what is the present value of;her inheritance? (Round to the nearest dollar.);5.;Present value of an annuity: Transit Insurance Company has made an;investment in another company that will guarantee it a cash flow of $37,250;each year for the next five years. If the company uses a discount rate of 15 percent;on its investments, what is the present value of this investment? (Round to the;nearest dollar.);6.;Future value of an annuity: Carlos Menendez is planning to invest $3,500;every year for the next six years in an investment paying 12 percent annually.;What will be the amount he will have at the end of the six years? (Round to the;nearest dollar.);7.;Bond price:Briar Corp is issuing a 10-year bond with a coupon rate of 7;percent. The interest rate for similar bonds is currently 9 percent. Assuming;annual payments, what is the present value of the bond? (Round to the nearest;dollar.);8.;PV of dividends:Cortez, Inc., is expecting to pay out a dividend of;$2.50 next year. After that it expects its dividend to grow at 7 percent for;the next four years. What is the present value of dividends over the next;five-year period if the required rate of return is 10 percent?;9.;PV of dividends: Givens, Inc., is a fast growing technology company that;paid a $1.25 dividend last week. The company's expected growth rates over the;next four years are as follows: 25 percent, 30 percent, 35 percent, and 30;percent. The company then expects to settle down to a constant-growth rate of 8;percent annually. If the required rate of return is 12 percent, what is the;present value of the dividends over the fast growth phase?;Week 5 Quiz;1. Genaro needs to capture a return of 40;percent for his one-year investment in a property. He believes that he can sell;the property at the end of the year for $150,000 and that the property will;provide him with rental income of $25,000. What is the maximum amount that;Genaro should be willing to pay for the property?;2. The process of identifying the bundle;of projects that creates the greatest total value and allocating the available;capital to the projects is known as;3. You are considering a project that has;an initial cost of $1,200,000. If you take the project, it will produce net;cash flows of $300,000 per year for the next six years. If the appropriate;discount rate for the project is 10 percent, what is the profitability index of;the project?;3. What might cause a firm to face capital;rationing?;4. The WACC for a firm is 19.75 percent.;You know that the firm is financed with $75 million of equity and $25 million;of debt. The cost of debt capital is 7 percent. What is the cost of equity for;the firm?;5. Bellamee;Inc., has semiannual bonds outstanding with five years to maturity and are;priced at $920.87. If the bonds have a coupon rate of 7 percent, then what is;the YTM for the bonds?;6. Beckham Corporation has semiannual;bonds outstanding with 13 years to maturity and are currently priced at;$746.16. If the bonds have a coupon rate of 8.5 percent, then what is the;after-tax cost of debt for Beckham if its marginal tax rate is 35%? Assume that;your calculation is made as on Wall Street.;7. RadicalVenOil, Inc., has a cost of;equity capital equal to 22.8 percent. If the risk-free rate of return is 10;percent and the expected return on the market is 18 percent, then what is the;firm's beta if the firm's marginal tax rate is 35 percent?;8.;Which type of project do financial managers typically use the highest cost of;capital when evaluating?;Week 6 Quiz;1. Planning models that are more;sophisticated than the percent of sales method have;2. Firms that achieve higher growth rates;without seeking external financing;3. Triumph Company has total assets worth;$6,413,228. Next year it expects a net income of $3,145,778 and will pay out 70;percent as dividends. If the firm wants to limit its external financing to $1;million, what is the growth rate it can support?

Paper#47593 | Written in 18-Jul-2015

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