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GB550 Financial Management Quiz with 100% Correct Answers




Question;1. Suppose you have $1,500 and plan to purchase a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually. How much will you have when the CD matures? (Points: 2) $1,781.53 $1,870.61 $1,964.14 $2,062.34Question 2. 2. Last year Ellis Inc.'s earnings per share were $3.50, and its growth rate during the prior 5 years was 9.0% per year. If that growth rate were maintained, how many years would it take for Ellis? EPS to triple? (Points: 2) 9.29 10.33 11.47 12.75Question 3. 3. Ellen now has $125. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding? (Points: 2) $205.83 $216.67 $228.07 $240.08 $252.08Question 4. 4. Suppose an ExxonMobil Corporation bond will pay $4,500 ten years from now. If the going interest rate on safe 10-year bonds is 4.25%, how much is the bond worth today? (Points: 2) $2,819.52 $2,967.92 $3,116.31 $3,272.13 Question 5. 5. You plan to invest in bonds that pay 6.0%, compounded annually. If you invest $10,000 today, how many years will it take for your investment to grow to $30,000? (Points: 2) 12.37 13.74 15.27 18.85Question 6. 6. Chuck has $2,500 invested in a bank that pays 4% annually. How long will it take for his funds to double? (Points: 2) 14.39 15.15 15.95 17.67Question 7. 7. Which of the following statements is CORRECT? (Points: 2) It is generally more expensive to form a proprietorship than a corporation because, with a proprietorship, extensive legal documents are required. Corporations face fewer regulations than sole proprietorships. One disadvantage of operating a business as a sole proprietorship is that the firm is subject to double taxation, at both the firm level and the owner level. One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership. If a regular partnership goes bankrupt, each partner is exposed to liabilities only up to the amount of his or her investment in the business.Question 8. 8. Which of the following statements is CORRECT? (Points: 2) A time line is not meaningful unless all cash flows occur annually. Time lines are not useful for visualizing complex problems prior to doing actual calculations. Time lines cannot be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly. Time lines can be constructed where some of the payments constitute an annuity but others are unequal and thus are not part of the annuity.Question 9. 9. Cheers Inc. operates as a partnership. Now the partners have decided to convert the business into a regular corporation. Which of the following statements is CORRECT? (Points: 2) Assuming Cheers is profitable, less of its income will be subject to federal income taxes. Cheers will now be subject to fewer regulations. Cheers? shareholders (the ex-partners) will now be exposed to less liability. Cheers? investors will be exposed to less liability, but they will find it more difficult to transfer their ownership.Question 10. 10. Which of the following could explain why a business might choose to operate as a corporation rather than as a sole proprietorship or a partnership? (Points: 2) Corporations generally find it relatively difficult to raise large amounts of capital. Less of a corporation?s income is generally subjected to taxes than would be true if the firm were a partnership. Corporate shareholders escape liability for the firm's debts, but this factor may be offset by the tax disadvantages of the corporate form of organization. Corporate investors are exposed to unlimited liability.


Paper#49953 | Written in 18-Jul-2015

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