FIN 571 Week 1 to 6 Quiz

FIN 571 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?

FIN 571 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?

FIN 571 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.

FIN 571 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?

FIN 571 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?

FIN 571 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?