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STR 581 WEEK 4 CAPSTONE FINAL EXAM PART 2

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Question;1. Which of the following financial;statements is concerned with the company at a point in time?;income statement;statement of cash flows;retained earnings statement;balance sheet;2. A cost which remains constant per;unit at various levels of activity is a;fixed cost;mixed cost;variable cost;manufacturing cost;3. 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?;$600;$375;$225;$321;4. 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.);32%;16%;12%;40%;5. The process of evaluating;financial data that change under alternative courses of action is called;contribution margin analysis;cost-benefit analysis;double entry analysis;incremental analysis;6. 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 profitability index;the internal rate of return;the modified internal rate of return;7. The convention of consistency;refers to consistent use of accounting principles;among firms;within industries;throughout the accounting period;among accounting periods;8. 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%;9. Which of the following is;considered a hybrid organizational form?;limited liability partnership;partnership;sole proprietorship;corporation;10. An activity that has a direct;cause-effect relationship with the resources consumed is a(n);overhead rate;product activity;cost driver;cost pool;11. 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?;$11.63;$13.50;$9.72;$12.50;12. 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;0.90;0.11;1.11;13. Your firm has an equity;multiplier of 2.47. What is the debt-to-equity ratio?;0;1.74;0.60;1.47;14. If a company?s weighted average;cost of capital is less than the required return on equity, then the;firm;partnership;is perceived to be safe;is financed with more than 50% debt;has debt in its capital structure;15. 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;variable costing;absorption costing;product costing;16. The major element in budgetary;control is;the comparison of actual results with planned objectives.;the valuation of inventories;the preparation of long-term plans;the approval of the budget by the stockholders;17. Horizontal analysis is a;technique for evaluating a series of financial statement data over a period of;time;to determine which items are in error.;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.;that has been arranged from the lowest number to the;highest number.;18. Which of the following is an;advantage of corporations relative to partnerships and sole proprietorships?;lower taxes;most common form of organization;harder to transfer ownership;reduced legal liability for investors;19. The break-even point is where;contribution margin equals total fixed costs.;total variable costs equal total fixed costs.;total sales equal total variable costs.;total sales equal total fixed costs.;20. 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.;$1,787 million;$1,344 million;$1,315 million;$453.6 million;21. Which of the following is;considered a hybrid organizational form?;partnership;limited liability partnership;corporation;sole proprietorship;22. The most important information;needed to determine if companies can pay their current obligations is the;projected net income for next year;relationship between short-term and long-term liabilities;relationship between current assets and current liabilities;net income for this year;23. Gateway, Corp. has an;inventory turnover of 5.6. What is the firm?s days?s sales in inventory?;61.7;57.9;65.2;64.3;24. Horizontal analysis is also known;as;vertical analysis;linear analysis;trend analysis;common size analysis;25. 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 net worth;the statement of working capital;the statement of cash flows;the statement of retained earnings;26. 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;$429,560;$414,322;$480,906;27. 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.);$972;$1,066;$1,014;$923;28. Process costing is used when;dissimilar products are involved;production is aimed at fulfilling a specific customer;order.;the production process is continuous.;costs are to be assigned to specific jobs.;29. 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);$22,680;$26,454;$19,444;$16,670;30. 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;flexible accounting;static reporting;master budgeting;responsibility accounting;31. Variance reports are;SEC financial reports;internal reports for management;external financial reports;all of these;32. The cash conversion cycle?;shows how long the firm keeps its inventory before selling;it.;estimates how long it takes on average for the firm to;collect its outstanding accounts receivables balance.;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.;33. 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.;34. Internal reports that review the;actual impact of decisions are prepared by;the controller;department heads;factory workers;management accountants;35. 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%;36. The group of users of accounting;information charged with achieving the goals of the business is its;auditors;investors;managers;creditors;37. An unrealistic budget is more;likely to result when it;has been developed in a bottom up fashion.;has been developed by all levels of management.;is developed with performance appraisal usages in mind.;has been developed in a top down fashion.;38. 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;$2,667,904;$1,745,600;$5,233,442;39. Firms that achieve higher growth;rates without seeking external financing;Have a low plowback ratio;are highly leveraged;have less equity and/or are able to generate high net;income leading to a high ROE.;None of these;40. 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;$1,844,022;$2,123,612;$2,303,010

 

Paper#51693 | Written in 18-Jul-2015

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