Question 2
Which of the following statements is incorrect with respect to time lines?
Select one:
a. A helpful tool for organizing our analysis is the time line.
b. Cash flows we pay out are called outflows and designated with a negative number.
c. Cash flows we receive are called inflows and denoted with a positive number.
d. Interest rates are not included on our time lines.
Feedback
The correct answer is: Interest rates are not included on our time lines.
Question 2
Which of the following will increase the present value of an annuity?
Select one:
a.The final payment diminishes.
b.The discount rate decreases.
c.The number of periods the annuity is received decreases.
d.The discount rate increases.
Feedback
The correct answer is: The discount rate decreases.
Question 3
Which of the following will not increase a present value?
Select one:
a.Decrease the number of periods
b.None of these answers is correct
c.Increase the future value
d.Increase the interest rate
Feedback
The correct answer is: Increase the interest rate
Question 4
Consider a series of uneven cash flows received over a period of time in the future. The present value of these cash flows will most likely be
Select one:
a.Larger than the sum of the cash flows.
b.Smaller than the sum of the cash flows.
c.Equal to the sum of the cash flows.
d.Either larger or smaller than the sum of the cash flows.
Feedback
The correct answer is: Smaller than the sum of the cash flows.
Question 5
Assume a company’s total asset turnover is equal to 4.75. What is the correct interpretation of this ratio?
Select one:
a.Total assets are kept on average for 4.75 days.
b.Total assets are kept on average for 47.5 years.
c.Each dollar of total assets generates $4.75 of sales.
d.Total assets are kept on average for 4.75 years.
Feedback
The correct answer is: Each dollar of total assets generates $4.75 of sales.
Question 6
This sub-area of finance looks at firm decisions in acquiring and utilizing cash received from investors or from retained earnings.
Select one:
a.treasury management
b.investments
c.None of these
d.financial management
Feedback
The correct answer is: financial management
Question 7
How are present values affected by changes in interest rates?
Select one:
a.Present values are not affected by changes in interest rates.
b.The lower the interest rate, the larger the present value will be.
c.The higher the interest rate, the larger the present value will be.
d.One would need to know the future value in order to determine the impact.
Feedback
The correct answer is: The lower the interest rate, the larger the present value will be.
Question 8
Which of the following statements is correct?
Select one:
a.Financial managers double-check the accountant’s statements.
b.Financial managers are focused on what happened in the past.
c.Accountants are focused on what happened in the past.
d.Both accountants and financial managers use total quality management systems to standardize data.
Feedback
The correct answer is: Accountants are focused on what happened in the past.
Question 9
The present value of annuity payments made far into the future is:
Select one:
a.worth very little today.
b.valued as worthless as their value is not determinable.
c.worth much more today.
d.valued as having no time value of money.
Feedback
The correct answer is: worth very little today.
Question 10
Which type of ratio measures a firm’s ability to pay off short-term obligations without relying on inventory sales?
Select one:
a.Current
b.Internal-growth
c.Cash
d.Quick or acid test
Feedback
The correct answer is: Quick or acid test
Question 11
Common Equity consists of the following accounts
Select one:
a.Common stock only
b.Preferred stock, common stock, and retained earnings
c.Preferred stock and common stock
d.Common stock and retained earnings
Feedback
The correct answer is: Common stock and retained earnings
Question 12
Which of the following is a use of cash?
Select one:
a.The firm sells some of its fixed assets.
b.The firm takes its depreciation expense.
c.The firm decreases its accrued wages and taxes.
d.The firm issues more long-term debt.
Feedback
The correct answer is: The firm decreases its accrued wages and taxes.
Question 13
Assume that for year 2015 company A has a current ratio equal to 1.5, while company B has a current ratio equal to 2.5. Based on this information we would most likely conclude that
Select one:
a.Company A has a better liquidity position than company B.
b.Company B is more profitable than company A.
c.Company A is more profitable than company B.
d.Company B has a better liquidity position than company A.
Feedback
The correct answer is: Company B has a better liquidity position than company A.
Question 14
These are cash inflows and outflows associated with buying and selling of fixed or other long-term assets.
Select one:
a.Cash flows from operations
b.Cash flows from financing activities
c.Cash flows from investing activities
d.Net change in cash and cash equivalents
Feedback
The correct answer is: Cash flows from investing activities
Question 15
Compounding monthly versus annually causes the interest rate to be effectively __________ , and thus the future value
Select one:
a.Higher; is also higher.
b.Smaller; is higher.
c.Higher; is smaller.
d.Smaller; is also smaller.
Feedback
The correct answer is: Higher; is also higher.
Question 16
Financial management involves decisions about which of the following?
Select one:
a.What type of capital should be raised
b.
How to minimize taxation
c.All of these
d.Which projects to fund
Feedback
The correct answer is: All of these
Question 17
This is a general term for securities like stocks, bonds, and other assets that represent ownership in a cash flow.
Select one:
a.financial markets
b.
financial asset
c.real asset
d.investment
Feedback
The correct answer is: financial asset
Question 18
Which of the below IS NOT included in the calculation of operating income?
Select one:
a.Depreciation expense
b.Cost of goods sold
c.Sales
d.Interest expense
Feedback
The correct answer is: Interest expense
Question 19
To move a cash flow in time from period 4 to period 6 we would need to
Select one:
a.Divide the cash flow by a number greater than one.
b.
Cut the cash flow in half.
c.Multiply the cash flow by a number greater than one.
d.Square the cash flow.
Feedback
The correct answer is: Multiply the cash flow by a number greater than one.
Question 20
Firms with high PE ratios _________.
Select one:
a.usually have lower credit ratings
b.
usually are expected to experience rapid increases in future dividends and/or earnings growth
c.usually have high debt ratios
d.usually are expected to experience a slower growth rate in sales
Feedback
The correct answer is: usually are expected to experience rapid increases in future dividends and/or earnings growth
You are considering a stock investment in one of two firms (A and B), both of which operate in the same industry. A finances its $20 million in assets with $18 million in debt and $2 million in equity. B finances its $20 million in assets with $2 million in debt and $18 million in equity. Calculate the debt-to-equity ratio for the two firms.
Select one:
a.Firm A: 9 times; Firm B: 0.11 times
b.Firm A: 19 times; Firm B: 1.11 times
c.Firm A: 19 times; Firm B: 0.11 times
d.Firm A: 9 times; Firm B: 1.11 times
Feedback
The correct answer is: Firm A: 9 times; Firm B: 0.11 times
Question 2
What is the present value of a $500 payment in one year when the discount rate is 5 percent?
Select one:
a.$475.00
b.$476.19
c.$500.00
d.$525.00
Feedback
The correct answer is: $476.19
Question 3
Income Statement Bullseye, Inc.’s 2013 income statement lists the following income and expenses: EBIT = $900,000, interest expense = $85,000, and net income = $570,000. What are the 2013 taxes reported on the income statement?
Select one:
a.There is not enough information to calculate 2013 taxes.
b.$815,000
c.$330,000
d.$245,000
Feedback
The correct answer is: $245,000
Question 4
Debt Management Ratios You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $100 million in assets with $90 million in debt and $10 million in equity. LotsofEquity, Inc. finances its $100 million in assets with $10 million in debt and $90 million in equity. What are the debt ratio, equity multiplier, and debt-to-equity ratio for the two firms?
Select one:
a.LotsofDebt: 10 percent, 1.11 times, 0.1111 times, respectively; and LotsofEquity: 90 percent, 10 times, 9 times, respectively.
b.LotsofDebt: 10 percent, 10 times, 9 times, respectively; and LotsofEquity: 90 percent, 1.11 times, 0.1111 times, respectively.
c.LotsofDebt: 90 percent, 10 times, 9 times, respectively; and LotsofEquity: 10 percent, 1.11 times, 0.1111 times, respectively.
d.LotsofDebt: 90 percent, 1.11 times, 0.1111 times, respectively; and LotsofEquity: 10 percent, 10 times, 9 times, respectively.
Feedback
The correct answer is: LotsofDebt: 90 percent, 10 times, 9 times, respectively; and LotsofEquity: 10 percent, 1.11 times, 0.1111 times, respectively.
Question 5
If your company’s supplier offers you a discounted price of $200,000 if paid today, but you decide to wait with the payment for 4 years (your supplier is very patient) and pay the regular price of $300,000, you are in effect
Select one:
a.Borrowing $200,000 at 9.67%
b.Borrowing $200,000 at 8.67%
c.Borrowing $200,000 at 10.67%
d.Borrowing $200,000 at 7.67%
Feedback
The correct answer is: Borrowing $200,000 at 10.67%
Question 6
Correct
If you start making $115 monthly contributions today and continue them for six years, what is their present value if the compounding rate is 12 percent APR? What is the present value of this annuity?
Select one:
a.$5,941.12
b.$5,512.90
c.$5,633.10
d.$5,882.30
Feedback
The correct answer is: $5,941.12
Question 7
Statement of Cash Flows Crispy Corporation has net cash flow from financing activities for the last year of $20 million. The company paid $5 million in dividends last year. During the year, the change in notes payable on the balance sheet was an increase of $2 million, and change in common and preferred stock was an increase of $3 million. The end of year balance for long-term debt was $45 million. What was their beginning of year balance for long-term debt?
Select one:
a.$25 million
b.$15 million
c.$20 million
d.$35 million
Feedback
The correct answer is: $25 million
Question 8
What is the present value of a $500 deposit in year 1 and another $100 deposit at the end of year 4 if interest rates are 5 percent?
Select one:
a.$493.62
b.$480.00
c.$582.27
d.$558.46
Feedback
The correct answer is: $558.46
Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
How are future values affected by changes in interest rates?
Select one:
a.Future values are not affected by changes in interest rates.
b.The higher the interest rate, the larger the future value will be.
c.One would need to know the present value in order to determine the impact.
d.The lower the interest rate, the larger the future value will be.
Feedback
The correct answer is: The higher the interest rate, the larger the future value will be.
Question 2
Time value of money concepts can be used by:
Select one:
a.individuals doing personal financial planning.
b.All of these are users of time value of money concepts.
c.investors calculating a return on an investment.
d.CFOs and CEOs to make business decisions.
Feedback
The correct answer is: All of these are users of time value of money concepts.
Question 3
How are present values affected by changes in interest rates?
Select one:
a.Present values are not affected by changes in interest rates.
b.The higher the interest rate, the larger the present value will be.
c.One would need to know the future value in order to determine the impact.
d.The lower the interest rate, the larger the present value will be.
Feedback
The correct answer is: The lower the interest rate, the larger the present value will be.
Question 4
All of the below are correct EXCEPT:
Select one:
a.Each individual has his/her own rate of time preference.
b.$1 today is more valuable than $1 tomorrow
c.Needing to assign correct values to future cash flows of companies is why we need to be able to adjust for the rate of time preference.
d.People that value future consumption less than most of the other people will most likely end up being net lenders in the market.
Feedback
The correct answer is: People that value future consumption less than most of the other people will most likely end up being net lenders in the market.
Question 5
Which of the following is NOT true when developing a time line?
Select one:
a.Cash inflows are designated with a positive number.
b.Cash outflows are designated with a positive number.
c.The time line shows the magnitude of cash flows at different points in time.
d.The cost is known as the interest rate.
Feedback
The correct answer is: Cash outflows are designated with a positive number.
Question 6
The process of figuring out how much an amount that you expect to receive in the future is worth today is called:
Select one:
a.multiplying.
b.computing.
c.discounting.
d.compounding.
Feedback
The correct answer is: discounting.
Question 7
Which of the following will not increase a present value?
Select one:
a.None of these answers is correct
b.Decrease the number of periods
c.Increase the future value
d.Increase the interest rate
Feedback
The correct answer is: Increase the interest rate
Question 8
Assume we want to move a cash flow from period 7 to period 5. The calculation of the new amount of the cash flow would include
Select one:
a.Adding the interest rate to number one and raising the result to the power of 2.
b.Raising the interest rate to the power of 2.
c.Raising the interest rate to the power of 5.
d.Adding the interest rate to number one and raising the result to the power of 5.
Feedback
The correct answer is: Adding the interest rate to number one and raising the result to the power of 2.
Question 9
Which of the following statements is incorrect with respect to time lines?
Select one:
a.A helpful tool for organizing our analysis is the time line.
b.Cash flows we receive are called inflows and denoted with a positive number.
c.Interest rates are not included on our time lines.
d.Cash flows we pay out are called outflows and designated with a negative number.
Feedback
The correct answer is: Interest rates are not included on our time lines.
Question 10
Assume you deposit $100 in an account today and that a friend of yours deposits $100 in an account of another bank, also today. In one year, you have $110 in your account and your friend has $108 in his/her account. We can conclude that
Select one:
a.Your friend is getting a compound interest while you are getting a simple interest.
b.One of the two banks made a mistake in calculating the interest payment.
c.Your friend earned a higher rate of interest than you.
d.Your friend earned a lower rate of interest than you.
Feedback
The correct answer is: Your friend earned a lower rate of interest than you.
Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 2:59 AM |
| State | Finished |
| Completed on | Snday, September 12, 2021, 3:23 AM |
| Time taken | 24 mins 29 secs |
| Points | 5.00/5.00 |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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Question text
Five years ago, Jane invested $5,000 and locked in an 8 percent annual interest rate for 25 years (end 20 years from now). James can make a 20-year investment today and lock in a 10 percent interest rate. How much money should he invest now in order to have the same amount of money in 20 years as Jane?
Select one:
a.$3,160.43
b.$5,089.91
c.$7,346.64
d.$3,464.11
Feedback
The correct answer is: $5,089.91
Question 2
Question text
You have been promised to receive $550 in 3 years. After receiving the $550 you plan to deposit it for another 3 years at a 7% interest rate. How much will you have in year 6?
Select one:
a.$589
b.$676
c.$674
d.$666
Feedback
The correct answer is: $674
Question 3
Question text
How much do you need to deposit in your account today if you want to have $10,000 accumulated in your account in 6 years? Assume 5% interest rate.
Select one:
a.$9,524
b.$7,462
c.$7,000
d.$9,434
Feedback
The correct answer is: $7,462
Question 4
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What is the future value of $700 deposited for one year earning 4 percent interest rate annually?
Select one:
a.
$1,428
b.
$700
c.
$728
d.
$28
Feedback
The correct answer is: $728
Question 5
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Question text
What is the present value of a $500 payment in one year when the discount rate is 5 percent?
Select one:
a.
$525.00
b.
$476.19
c.
$500.00
d.
$475.00
Feedback
The correct answer is: $476.19
Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 3:28 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 3:42 AM |
| Time taken | 14 mins |
| Grade | 9.00 out of 10.00 (90%) |
Question 1
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The effective annual rate
Select one:
a.
Can never be equal to the annual periodic rate.
b.
Will never be greater than the annual periodic rate.
c.
Will always be smaller than the annual periodic rate.
d.
Will always be at least as large as the annual periodic rate.
Feedback
The correct answer is: Will always be at least as large as the annual periodic rate.
Question 2
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You are deciding among several different bank accounts. Which of the following will generate the highest effective annual rate (EAR)?
Select one:
a.
A 6 percent rate with quarterly compounding
b.
A 6 percent rate with monthly compounding
c.
A 6 percent rate with annual compounding
d.
A 5.98 percent rate with annual compounding
Feedback
The correct answer is: A 6 percent rate with monthly compounding
Question 3
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Question text
The simple form of an annualized interest rate is called the annual percentage rate (APR). The effective annual rate (EAR) is a:
Select one:
a.
less accurate measure of the interest rate paid for monthly compounding.
b.
more accurate measure of the interest rate paid for monthly compounding.
c.
measure that only applies to mortgages.
d.
concept that is only used because the law requires it, and is of no use to a borrower.
Feedback
The correct answer is: more accurate measure of the interest rate paid for monthly compounding.
Question 4
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When computing the rate of return from selling an investment, the number of years between the present and future cash flows is an important factor in determining:
Select one:
a.
the annual payments required.
b.
the annual rate earned.
c.
whether the present value or the future value is a cash inflow.
d.
whether the present value or the future value is a cash outflow.
Feedback
The correct answer is: the annual rate earned.
Question 5
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Question text
When you get your credit card bill, if you make a payment larger than the minimum payment:
Select one:
a.
you will not affect the payoff time.
b.
you will reduce the payoff time.
c.
you are wasting your current consumption and making TVM not work for you.
d.
you will increase the payoff time.
Feedback
The correct answer is: you will reduce the payoff time.
Question 6
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The present value of annuity payments made far into the future is:
Select one:
a.
valued as having no time value of money.
b.
worth very little today.
c.
valued as worthless as their value is not determinable.
d.
worth much more today.
Feedback
The correct answer is: worth very little today.
Question 7
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Question text
Assume the present value of a series of cash flows is equal to $100,000. Which of the below would be a possible interpretation of this result?
Select one:
a.
$100,000 is the sum of the cash flows adjusted for inflation.
b.
The sum of the cash flows is equal to $100,000.
c.
If you keep depositing the cash flows in a bank they will grow to $100,000 over time.
d.
$100,000 is the maximum we should be willing to pay for this series of cash flows.
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The correct answer is: $100,000 is the maximum we should be willing to pay for this series of cash flows.
Question 8
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We should expect all of these to be true EXCEPT:
Select one:
a.
Larger present value with a smaller number of time periods
b.
Future value larger than present value
c.
Higher future value with a lower rate of interest
d.
APR equal to or smaller than EAR
Feedback
The correct answer is: Higher future value with a lower rate of interest
Question 9
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Which of the following will increase the future value of an annuity?
Select one:
a.
The interest rate increases.
b.
The number of periods increases.
c.
The amount of the annuity increases.
d.
All of these will increase the future value of an annuity.
Feedback
The correct answer is: All of these will increase the future value of an annuity.
Question 10
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Question text
Consider a series of uneven cash flows received over a period of time in the future. The present value of these cash flows will most likely be
Select one:
a.
Smaller than the sum of the cash flows.
b.
Equal to the sum of the cash flows.
c.
Either larger or smaller than the sum of the cash flows.
d.
Larger than the sum of the cash flows.
Feedback
The correct answer is: Smaller than the sum of the cash flows.
Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 3:44 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 3:58 AM |
| Time taken | 13 mins 12 secs |
| Points | 5.00/5.00 |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
Complete
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Question text
If you start making $115 monthly contributions today and continue them for six years, what is their present value if the compounding rate is 12 percent APR? What is the present value of this annuity?
Select one:
a.
$5,941.12
b.
$5,633.10
c.
$5,882.30
d.
$5,512.90
Feedback
The correct answer is: $5,941.12
Question 2
Complete
1.00 points out of 1.00
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Question text
What is the present value of a $500 deposit in year 1 and another $100 deposit at the end of year 4 if interest rates are 5 percent?
Select one:
a.
$582.27
b.
$480.00
c.
$493.62
d.
$558.46
Feedback
The correct answer is: $558.46
Question 3
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Question text
Consider that you are 30 years old and have just changed to a new job. You have $91,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $4,800 each year into your new employer’s plan. If the rolled-over money and the new contributions both earn a 7 percent return, how much should you expect to have when you retire in 38 years?
Select one:
a.
$2,106,718.60
b.
$2,018,506.60
c.
$2,216,781.60
d.
$2,012,560.60
Feedback
The correct answer is: $2,018,506.60
Question 4
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Joey realizes that he has charged too much on his credit card and has racked up $3,000 in debt. If he can pay $150 each month and the card charges 18 percent APR (compounded monthly), how long will it take him to pay off the debt?
Select one:
a.
14.68 months
b.
23.96 months
c.
13.03 months
d.
20.00 months
Feedback
The correct answer is: 23.96 months
Question 5
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Question text
What is the present value, when interest rates are 6.5 percent, of a $100 payment made every year forever?
Select one:
a.
$6.50
b.
$1,538.46
c.
$650.00
d.
$1,000.00
Feedback
The correct answer is: $1,538.46
Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Saturday, August 28, 2021, 9:24 PM |
| State | Finished |
| Completed on | Saturday, August 28, 2021, 9:34 PM |
| Time taken | 10 mins 1 sec |
| Grade | 7.00 out of 10.00 (70%) |
Question 1
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Question text
Which of these are NOT basic approaches to minimizing the agency problem?
Select one:
a.
Ignore the conflict of interest
b.
All of these are basic approaches to minimizing the agency problem.
c.
Monitor managers’ actions
d.
Align managers’ personal interest with those of the owners by making the managers owners
Feedback
The correct answer is: All of these are basic approaches to minimizing the agency problem.
Question 2
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Methods to minimize agency problem include all except ________________.
Select one:
a.
Allow the CEO to purchase stock via an employee stock option plan
b.
Offer the managers an equity stake in the firm
c.
Allow the CEO to purchase bonds via an employee bond option plan
d.
Award the CEO stock options
Feedback
The correct answer is: Allow the CEO to purchase bonds via an employee bond option plan
Question 3
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Question text
Which of the following personal decisions is NOT impacted by finance?
Select one:
a.
Making retirement decisions
b.
Making credit card payments
c.
Borrowing money to purchase cars or homes
d.
All of these are impacted by finance.
Feedback
The correct answer is: All of these are impacted by finance.
Question 4
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The board of directors serves mainly to
Select one:
a.
Minimize the conflict of interest between managers and shareholders.
b.
Ensure workers are properly treated and compensated.
c.
Audit the financial statements of the company.
d.
Increase the expertise of the managers in running the business.
Feedback
The correct answer is: Minimize the conflict of interest between managers and shareholders.
Question 5
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As individual legal entities, corporations assume liability for their own debts, so the shareholders hold
Select one:
a.
unlimited liability.
b.
shared liability.
c.
joint liability.
d.
only limited liability.
Feedback
The correct answer is: only limited liability.
Question 6
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Which of the below is the goal that according to most finance professionals corporate managers ought to pursue?
Select one:
a.
Maximize the net profit margin
b.
Maximize profit
c.
Maximize market share
d.
Maximize shareholder wealth
Feedback
The correct answer is: Maximize shareholder wealth
Question 7
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Question text
Not all cash a company generates will be returned to the investors. Which of the following will NOT reduce the amount of capital returned to the investors?
Select one:
a.
None of these will reduce the amount of capital returned to the investors.
b.
Retained earnings
c.
Taxes
d.
Dividends
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The correct answer is: Dividends
Question 8
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The practice generally known as double taxation is due to
Select one:
a.
interest on shareholders’ dividends being taxed as income.
b.
corporate incomes being taxed at the corporate level, then again at the shareholder level when corporate profits are paid out as dividends.
c.
corporate income being taxed at both the federal and state levels.
d.
shareholders’ dividends being taxed at both the federal and state levels.
Feedback
The correct answer is: corporate incomes being taxed at the corporate level, then again at the shareholder level when corporate profits are paid out as dividends.
Question 9
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This subarea of finance involves methods and techniques to make appropriate decisions about what kinds of securities to own, which firms’ securities to buy, and how to be paid back in the form that the investor wishes.
Select one:
a.
Financial management
b.
Investments
c.
Real markets
d.
None of these
Feedback
The correct answer is: Investments
Question 10
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Which of the following is an example of aligning managers’ personal interests with those of the owners?
Select one:
a.
Pay the managers high salaries.
b.
Allow the managers to have as many perks as they request.
c.
Offer the managers shares of common stock of the firm.
d.
Trust the managers’ actions as they will always act in the owners’ best interest.
Feedback
The correct answer is: Offer the managers shares of common stock of the firm.
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FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 5, 2021, 8:28 AM |
| State | Finished |
| Completed on | Sunday, September 5, 2021, 8:41 AM |
| Time taken | 13 mins 2 secs |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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A firm had EBIT of $1,000, paid taxes of $225, expensed depreciation at $13, and its gross fixed assets increased by $25. What was the firm’s operating cash flow?
Select one:
a.
$737
b.
$813
c.
$788
d.
$763
Feedback
The correct answer is: $788
Question 2
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Which of the below represents a cash outflow?
Select one:
a.
A decline in inventories
b.
An increase in accrued wages
c.
Issuing more debt
d.
A decline in accounts payable
Feedback
The correct answer is: A decline in accounts payable
Question 3
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ABC Inc. has $100 in cash on its balance sheet at the end of 2009. During 2010, the firm issued $450 in common stock, reduced its notes payable by $40, purchased fixed assets in the amount of $750, and had cash flows from operating activities of $315. How much cash did ABC Inc. have on its balance sheet at the end of 2010?
Select one:
a.
$225
b.
$140
c.
-$25
d.
$75
Feedback
The correct answer is: $75
Question 4
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Which of the following activities result in an increase in a firm’s cash?
Select one:
a.
Decrease accounts payable
b.
Repurchase of common stock
c.
Decrease fixed assets
d.
Pay dividends
Feedback
The correct answer is: Decrease fixed assets
Question 5
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An income statement shows
Select one:
a.
The financial position of a company.
b.
The performance of a company over a period of time.
c.
Specific information about the compensation of senior management.
d.
How much is owed to bondholders.
Feedback
The correct answer is: The performance of a company over a period of time.
Question 6
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Which of the below IS NOT included in the calculation of operating income?
Select one:
a.
Depreciation expense
b.
Cost of goods sold
c.
Sales
d.
Interest expense
Feedback
The correct answer is: Interest expense
Question 7
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Financial statements of a corporation can be typically found in
Select one:
a.
The proxy statement.
b.
The articles of incorporation.
c.
The prospectus.
d.
The annual report.
Feedback
The correct answer is: The annual report.
Question 8
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All of the following are reasons that one should be cautious in interpreting financial statements EXCEPT:
Select one:
a.
Firms can take steps to over- or understate earnings at various times.
b.
All of these are reasons to be cautious in interpreting financial statements.
c.
It is difficult to compare two firms that use different depreciation methods.
d.
Financial managers have quite a bit of latitude in using accounting rules to manage their reported earnings.
Feedback
The correct answer is: All of these are reasons to be cautious in interpreting financial statements.
Question 9
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A balance sheet shows
Select one:
a.
The financial position of the company.
b.
Specific information about the compensation of senior management.
c.
The performance of the company over a period of time.
d.
The market value of company’s stock.
Feedback
The correct answer is: The financial position of the company.
Question 10
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Net Working Capital is computed as
Select one:
a.
Current assets divided by current liabilities.
b.
Total assets divided by total liabilities.
c.
Current assets minus current liabilities.
d.
Total assets minus total Liabilities.
Feedback
The correct answer is: Current assets minus current liabilities.
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Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 5, 2021, 8:44 AM |
| State | Finished |
| Completed on | Sunday, September 5, 2021, 8:49 AM |
| Time taken | 5 mins 3 secs |
| Points | 5.00/5.00 |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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Assume that a company had a net income equal to $500,000, and paid out $200,000 in dividends. The balance in the retained earnings account at the beginning of the year was $800,000. What is the balance in the retained earnings account at the end of the year?
Select one:
a.
$1,300,000
b.
$1,500,000
c.
$700,000
d.
$1,100,000
Feedback
The correct answer is: $1,100,000
Question 2
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Blue Bayou, a fictitious advertising company, reported revenues of $50 million, total expenses of $35 million, and net income of $15 million in the most recent year. If accounts receivable decreased by $12 million, how much cash did the company receive from customers?
Select one:
a.
$62 million
b.
$15 million
c.
$50 million
d.
$38 million
Feedback
The correct answer is: $62 million
Question 3
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Income Statement You have been given the following information for Fina’s Furniture Corp.:
Net sales = $25,500,000;
Cost of goods sold = $10,250,000;
Addition to retained earnings = $305,000;
Dividends paid to preferred and common stockholders = $500,000;
Interest expense = $2,000,000.
The firm’s tax rate is 30 percent. What is the depreciation expense for Fina’s Furniture Corp.?
Select one:
a.
$12,400,000
b.
$12,100,000
c.
$14,100,000
d.
$14,400,000
Feedback
The correct answer is: $12,100,000
Question 4
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Balance Sheet You are evaluating the balance sheet for Campus Corporation. From the balance sheet you find the following balances: cash and marketable securities = $400,000, accounts receivable = $200,000, inventory = $100,000, accrued wages and taxes = $10,000, accounts payable = $300,000, and notes payable = $600,000. What is Campus’s net working capital?
Select one:
a.
$1,610,000
b.
$700,000
c.
-$210,000
d.
$910,000
Feedback
The correct answer is: -$210,000
Question 5
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Balance Sheet Harvey’s Hamburger Stand has total assets of $3 million of which $1 million are current assets. Cash makes up 20 percent of the current assets and accounts receivable makes up another 5 percent of current assets. Harvey’s gross plant and equipment has a book value of $1.5 million and other long-term assets have a book value of $1 million. Using this information, what is the balance of inventory and the balance of depreciation on Harvey’s Hamburger Stand’s balance sheet?
Select one:
a.
$750,000, $500,000
b.
$250,000, $500,000
c.
$250,000, $1 million
d.
$750,000, $1 million
Feedback
The correct answer is: $750,000, $500,000
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Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 5, 2021, 8:52 AM |
| State | Finished |
| Completed on | Sunday, September 5, 2021, 9:05 AM |
| Time taken | 13 mins 53 secs |
| Grade | 9.00 out of 10.00 (90%) |
Question 1
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Firms with high PE ratios _________.
Select one:
a.
usually are expected to experience rapid increases in future dividends and/or earnings growth
b.
usually have lower credit ratings
c.
usually have high debt ratios
d.
usually are expected to experience a slower growth rate in sales
Feedback
The correct answer is: usually are expected to experience rapid increases in future dividends and/or earnings growth
Question 2
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Which of the following statements is correct?
Select one:
a.
A low average payment period and a low accounts payable turnover are a sign of good management.
b.
A high average payment period and a low accounts payable turnover are a sign of good management.
c.
A high average payment period and a high accounts payable turnover are a sign of good management.
d.
A low average payment period and a high accounts payable turnover are a sign of good management.
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The correct answer is: A high average payment period and a low accounts payable turnover are a sign of good management.
Question 3
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Which type of ratio measures the dollars of current assets available to pay each dollar of current liabilities?
Select one:
a.
Current
b.
Cross-section
c.
Internal-growth
d.
Quick or acid test
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The correct answer is: Current
Question 4
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All of the following are users of financial ratios EXCEPT:
Select one:
a.
investors.
b.
managers.
c.
analysts.
d.
auditors.
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The correct answer is: auditors.
Question 5
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Which of the following activities will increase a firm’s current ratio?
Select one:
a.
None of these statements will increase a firm’s current ratio.
b.
Accounts receivable are paid in cash.
c.
Accrued wages and taxes increase.
d.
Purchase inventory using cash.
Feedback
The correct answer is: None of these statements will increase a firm’s current ratio.
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If company A has a lower P/E ratio than company B we would conclude that
Select one:
a.
Company A’s operating cost is likely smaller than company B’s operating cost.
b.
Company A is likely not very liquid.
c.
Company B is a better buy than company A.
d.
Company A’s net income is expected to grow slower in the future than company B’s.
Feedback
The correct answer is: Company A’s net income is expected to grow slower in the future than company B’s.
Question 7
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A firm that is efficient in inventory management will have:
Select one:
a.
a low inventory turnover ratio and a high days sales in inventory ratio.
b.
a high inventory turnover ratio and a low days sales in inventory ratio.
c.
a low inventory turnover ratio and a low days sales in inventory ratio.
d.
a high inventory turnover ratio and a high days sales in inventory ratio.
Feedback
The correct answer is: a high inventory turnover ratio and a low days sales in inventory ratio.
Question 8
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Trend analysis
Select one:
a.
Is used to identify new industry trends.
b.
Is used to compare a company against its industry peers.
c.
Is used to evaluate changes in a company’s performance over time.
d.
Is used primarily to compute the probability a company will go bankrupt within a certain period of time.
Feedback
The correct answer is: Is used to evaluate changes in a company’s performance over time.
Question 9
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Which ratio measures how many days inventory is held before the final product is sold?
Select one:
a.
Inventory turnover
b.
Days’ sales in inventory
c.
Total asset turnover
d.
Inventory intensity ratio
Feedback
The correct answer is: Days’ sales in inventory
Question 10
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Which of these statements is true?
Select one:
a.
A high inventory turnover ratio or a low days’ sales in inventory is a sign of good inventory management.
b.
A high inventory turnover ratio or a high days’ sales in inventory is a sign of good inventory management.
c.
A low inventory turnover ratio or a high days’ sales in inventory is a sign of good inventory management.
d.
A low inventory turnover ratio or a low days’ sales in inventory is a sign of good inventory management.
Feedback
The correct answer is: A high inventory turnover ratio or a low days’ sales in inventory is a sign of good inventory management.
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FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 5, 2021, 9:07 AM |
| State | Finished |
| Completed on | Sunday, September 5, 2021, 9:11 AM |
| Time taken | 4 mins 27 secs |
| Points | 4.00/4.00 |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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Debt Management Ratios You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $100 million in assets with $90 million in debt and $10 million in equity. LotsofEquity, Inc. finances its $100 million in assets with $10 million in debt and $90 million in equity. What are the debt ratio, equity multiplier, and debt-to-equity ratio for the two firms?
Select one:
a.
LotsofDebt: 10 percent, 10 times, 9 times, respectively; and LotsofEquity: 90 percent, 1.11 times, 0.1111 times, respectively.
b.
LotsofDebt: 90 percent, 10 times, 9 times, respectively; and LotsofEquity: 10 percent, 1.11 times, 0.1111 times, respectively.
c.
LotsofDebt: 10 percent, 1.11 times, 0.1111 times, respectively; and LotsofEquity: 90 percent, 10 times, 9 times, respectively.
d.
LotsofDebt: 90 percent, 1.11 times, 0.1111 times, respectively; and LotsofEquity: 10 percent, 10 times, 9 times, respectively.
Feedback
The correct answer is: LotsofDebt: 90 percent, 10 times, 9 times, respectively; and LotsofEquity: 10 percent, 1.11 times, 0.1111 times, respectively.
Question 2
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Debt Management Ratios Zoe’s Dog Toys, Inc. reported a debt to equity ratio of 0.5 times at the end of 2011. If the firm’s total assets at year-end are $50 million, how much of their assets is financed with equity?
Select one:
a.
$16.67m
b.
$33.33m
c.
$50m
d.
$25m
Feedback
The correct answer is: $33.33m
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Liquidity Ratios You are evaluating the balance sheet for Blue Jays Corporation. From the balance sheet you find the following balances: cash and marketable securities = $200,000, accounts receivable = $800,000, inventory = $1,000,000, accrued wages and taxes = $250,000, accounts payable = $400,000, and notes payable = $300,000. What are Blue Jays’ current ratio, quick ratio, and cash ratio, respectively?
Select one:
a.
2.10526, 1.05263, 0.21053
b.
3.07692, 1.05263, 0.30769
c.
1.05263, 1.05263, 0.21053
d.
3.07692, 1.53846, 0.30769
Feedback
The correct answer is: 2.10526, 1.05263, 0.21053
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Liquidity Ratios The top part of Mars, Inc.’s 2013 balance sheet is listed as follows (in millions of dollars).
What are Mars, Inc.’s current ratio, quick ratio, and cash ratio for 2013?
Select one:
a.
0.1111, 0.5556, 0.2
b.
10.5, 6.0, 1.0
c.
2.3333, 0.5556, 0.1111
d.
4.2, 1.0, 0.2
Feedback
The correct answer is: 2.3333, 0.5556, 0.1111
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FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 5, 2021, 10:38 PM |
| State | Finished |
| Completed on | Sunday, September 5, 2021, 10:47 PM |
| Time taken | 9 mins 2 secs |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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Net Working Capital is computed as
Select one:
a.
Total assets minus total Liabilities.
b.
Current assets minus current liabilities.
c.
Total assets divided by total liabilities.
d.
Current assets divided by current liabilities.
Feedback
The correct answer is: Current assets minus current liabilities.
Question 2
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All of the following are cash flows associated with financing activities EXCEPT:
Select one:
a.
Issuing stock
b.
Increase in accounts payable
c.
Paying dividends
d.
Stock Repurchases
Feedback
The correct answer is: Increase in accounts payable
Question 3
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Which financial statement reports a firm’s assets, liabilities, and equity at a particular point in time?
Select one:
a.
Statement of retained earnings
b.
Income statement
c.
Statement of cash flows
d.
Balance sheet
Feedback
The correct answer is: Balance sheet
Question 4
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All of the following are reasons that one should be cautious in interpreting financial statements EXCEPT:
Select one:
a.
Firms can take steps to over- or understate earnings at various times.
b.
All of these are reasons to be cautious in interpreting financial statements.
c.
Financial managers have quite a bit of latitude in using accounting rules to manage their reported earnings.
d.
It is difficult to compare two firms that use different depreciation methods.
Feedback
The correct answer is: All of these are reasons to be cautious in interpreting financial statements.
Question 5
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An equity-financed firm will
Select one:
a.
pay more in income taxes than an otherwise identical debt-financed firm.
b.
pay the same in income taxes as an otherwise identical debt-finance firm.
c.
pay more in interest payments than an otherwise identical debt-financed firm.
d.
pay less in income taxes than an otherwise identical debt-financed firm.
Feedback
The correct answer is: pay more in income taxes than an otherwise identical debt-financed firm.
Question 6
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Which of the following activities result in an increase in a firm’s cash?
Select one:
a.
Repurchase of common stock
b.
Decrease fixed assets
c.
Decrease accounts payable
d.
Pay dividends
Feedback
The correct answer is: Decrease fixed assets
Question 7
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A balance sheet shows
Select one:
a.
The market value of company’s stock.
b.
Specific information about the compensation of senior management.
c.
The performance of the company over a period of time.
d.
The financial position of the company.
Feedback
The correct answer is: The financial position of the company.
Question 8
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ABC Inc. has $100 in cash on its balance sheet at the end of 2009. During 2010, the firm issued $450 in common stock, reduced its notes payable by $40, purchased fixed assets in the amount of $750, and had cash flows from operating activities of $315. How much cash did ABC Inc. have on its balance sheet at the end of 2010?
Select one:
a.
$140
b.
$75
c.
$225
d.
-$25
Feedback
The correct answer is: $75
Question 9
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Lemmon Inc. lists fixed assets of $100 on its balance sheet. The firm’s fixed assets have recently been appraised at $140. The firm’s balance sheet also lists current assets at $15. Current assets were appraised at $16.50. Current liabilities book and market values stand at $12 and the firm’s long-term debt is $40. Calculate the market value of the firm’s stockholders’ equity.
Select one:
a.
$112.50
b.
$104.50
c.
$156.50
d.
$144.50
Feedback
The correct answer is: $104.50
Question 10
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What would be the most likely result of a company’s decision to use accelerated (as opposed to straight line) depreciation?
Select one:
a.
It would result in a lower interest payment to the creditors.
b.
It would make net income bigger.
c.
It would shift some of the current and near future tax burden into later years.
d.
It would result in a lower total tax burden over time.
Feedback
The correct answer is: It would shift some of the current and near future tax burden into later years.
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FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 5, 2021, 10:49 PM |
| State | Finished |
| Completed on | Sunday, September 5, 2021, 11:09 PM |
| Time taken | 20 mins 3 secs |
| Points | 5.00/5.00 |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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Income Statement You have been given the following information for Fina’s Furniture Corp.:
Net sales = $25,500,000;
Cost of goods sold = $10,250,000;
Addition to retained earnings = $305,000;
Dividends paid to preferred and common stockholders = $500,000;
Interest expense = $2,000,000.
The firm’s tax rate is 30 percent. What is the depreciation expense for Fina’s Furniture Corp.?
Select one:
a.
$14,400,000
b.
$12,400,000
c.
$12,100,000
d.
$14,100,000
Feedback
The correct answer is: $12,100,000
Question 2
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Assume a company acquires a new building for the price of $7.5 million. Using straight line depreciation, and setting the useful life of the building to 30 years, the annual depreciation expense associated with the building will be equal to
Select one:
a.
$1,500,000.
b.
$500,000.
c.
$750,000.
d.
$250,000.
Feedback
The correct answer is: $250,000.
Question 3
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Free Cash Flow Catering Corp. reported free cash flows for 2013 of $8 million and investment in operating capital of $2 million. Catering listed $1 million in depreciation expense and $2 million in taxes on its 2008 income statement. What was Catering’s 2013 EBIT?
Select one:
a.
$7 million
b.
$10 million
c.
$13 million
d.
$11 million
Feedback
The correct answer is: $11 million
Question 4
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Statement of Cash Flows Fina’s Faucets, Inc. has net cash flows from operating activities for the last year of $17 million. The income statement shows that net income is $15 million and depreciation expense is $6 million. During the year, the change in inventory on the balance sheet was an increase of $4 million, change in accrued wages and taxes was an increase of $1 million and change in accounts payable was an increase of $1 million. At the beginning of the year the balance of accounts receivable was $5 million. What was the end of year balance for accounts receivable?
Select one:
a.
$7 million
b.
$2 million
c.
$9 million
d.
$3 million
Feedback
The correct answer is: $7 million
Question 5
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Blue Bayou, a fictitious advertising company, reported revenues of $50 million, total expenses of $35 million, and net income of $15 million in the most recent year. If accounts receivable decreased by $12 million, how much cash did the company receive from customers?
Select one:
a.
$62 million
b.
$15 million
c.
$50 million
d.
$38 million
Feedback
The correct answer is: $62 million
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FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 5, 2021, 11:10 PM |
| State | Finished |
| Completed on | Sunday, September 5, 2021, 11:24 PM |
| Time taken | 14 mins 28 secs |
| Grade | 9.00 out of 10.00 (90%) |
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Assume a company’s total asset turnover is equal to 4.75. What is the correct interpretation of this ratio?
Select one:
a.
Total assets are kept on average for 47.5 years.
b.
Total assets are kept on average for 4.75 years.
c.
Total assets are kept on average for 4.75 days.
d.
Each dollar of total assets generates $4.75 of sales.
Feedback
The correct answer is: Each dollar of total assets generates $4.75 of sales.
Question 2
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Firms with high PE ratios _________.
Select one:
a.
usually are expected to experience rapid increases in future dividends and/or earnings growth
b.
usually have lower credit ratings
c.
usually have high debt ratios
d.
usually are expected to experience a slower growth rate in sales
Feedback
The correct answer is: usually are expected to experience rapid increases in future dividends and/or earnings growth
Question 3
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Which ratio measures how many days inventory is held before the final product is sold?
Select one:
a.
Inventory intensity ratio
b.
Days’ sales in inventory
c.
Total asset turnover
d.
Inventory turnover
Feedback
The correct answer is: Days’ sales in inventory
Question 4
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Which type of ratio measures the dollars of current assets available to pay each dollar of current liabilities?
Select one:
a.
Internal-growth
b.
Quick or acid test
c.
Cross-section
d.
Current
Feedback
The correct answer is: Current
Question 5
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The difference between ROE and ROA is that
Select one:
a.
ROA takes into account the impact of financial leverage.
b.
ROE takes into account depreciation expense.
c.
ROE takes into account the impact of financial leverage.
d.
ROA takes into account depreciation expense.
Feedback
The correct answer is: ROE takes into account the impact of financial leverage.
Question 6
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Which of the following will increase a firm’s quick ratio assuming no other accounts change?
Select one:
a.
An increase in accounts receivable
b.
An increase in marketable securities
c.
A reduction in accounts payable
d.
All of these statements will increase a firm’s quick ratio
Feedback
The correct answer is: All of these statements will increase a firm’s quick ratio
Question 7
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A firm has an average collection period of 13 days. The industry average ACP is 27 days. Which of the following statements is true given this information?
Select one:
a.
The firm could probably increase its sales by relaxing its strict accounts receivable policy.
b.
The firm has an excellent accounts receivable policy.
c.
The firm is maximizing its net income by minimizing its losses in accounts receivable.
d.
None of the statements are correct.
Feedback
The correct answer is: The firm could probably increase its sales by relaxing its strict accounts receivable policy.
Question 8
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Which of the statements below is correct?
Select one:
a.
Financial leverage rises with a lower debt ratio.
b.
Companies with lower debt ratios are more risky to shareholders.
c.
Higher debt ratio is better for a company unless the industry is going through a recession.
d.
Having a higher debt ratio is neither good nor bad.
Feedback
The correct answer is: Having a higher debt ratio is neither good nor bad.
Question 9
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A firm that is efficient in inventory management will have:
Select one:
a.
a low inventory turnover ratio and a low days sales in inventory ratio.
b.
a high inventory turnover ratio and a low days sales in inventory ratio.
c.
a low inventory turnover ratio and a high days sales in inventory ratio.
d.
a high inventory turnover ratio and a high days sales in inventory ratio.
Feedback
The correct answer is: a high inventory turnover ratio and a low days sales in inventory ratio.
Question 10
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Trend analysis
Select one:
a.
Is used to compare a company against its industry peers.
b.
Is used to identify new industry trends.
c.
Is used to evaluate changes in a company’s performance over time.
d.
Is used primarily to compute the probability a company will go bankrupt within a certain period of time.
Feedback
The correct answer is: Is used to evaluate changes in a company’s performance over time.
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FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 5, 2021, 11:26 PM |
| State | Finished |
| Completed on | Sunday, September 5, 2021, 11:34 PM |
| Time taken | 8 mins 4 secs |
| Points | 4.00/4.00 |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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Debt Management Ratios Zoe’s Dog Toys, Inc. reported a debt to equity ratio of 0.5 times at the end of 2011. If the firm’s total assets at year-end are $50 million, how much of their assets is financed with equity?
Select one:
a.
$33.33m
b.
$50m
c.
$25m
d.
$16.67m
Feedback
The correct answer is: $33.33m
Question 2
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Liquidity Ratios The top part of Mars, Inc.’s 2013 balance sheet is listed as follows (in millions of dollars).
What are Mars, Inc.’s current ratio, quick ratio, and cash ratio for 2013?
Select one:
a.
2.3333, 0.5556, 0.1111
b.
10.5, 6.0, 1.0
c.
4.2, 1.0, 0.2
d.
0.1111, 0.5556, 0.2
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The correct answer is: 2.3333, 0.5556, 0.1111
Question 3
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You are considering a stock investment in one of two firms (A and B), both of which operate in the same industry. A finances its $20 million in assets with $18 million in debt and $2 million in equity. B finances its $20 million in assets with $2 million in debt and $18 million in equity. Calculate the equity multiplier for the two firms.
Select one:
a.
Firm A: 10 times; Firm B: 1.11 times
b.
Firm A: 10 times; Firm B: 9.99 times
c.
Firm A: 15 times; Firm B: 1.00 times
d.
Firm A: 20 times; Firm B: 1.11 times
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The correct answer is: Firm A: 10 times; Firm B: 1.11 times
Question 4
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A firm has a profit margin of 12 percent; total asset turnover of 0.55 and an equity multiplier of 2.2. What is the firm’s ROA and ROE?
Select one:
a.
ROA = 9.5 percent; ROE = 20.9 percent
b.
ROA = 8.1 percent; ROE = 17.82 percent
c.
ROA = 6.6 percent; ROE = 14.52 percent
d.
ROA = 7.2 percent; ROE = 15.84 percent
Feedback
The correct answer is: ROA = 6.6 percent; ROE = 14.52 percent
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FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 3:59 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 4:21 AM |
| Time taken | 21 mins 54 secs |
| Grade | 19.00 out of 20.00 (95%) |
Question 1
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Which of the following statements is incorrect with respect to time lines?
Select one:
a.
A helpful tool for organizing our analysis is the time line.
b.
Cash flows we pay out are called outflows and designated with a negative number.
c.
Cash flows we receive are called inflows and denoted with a positive number.
d.
Interest rates are not included on our time lines.
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The correct answer is: Interest rates are not included on our time lines.
Question 2
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Which of the following will increase the present value of an annuity?
Select one:
a.
The final payment diminishes.
b.
The discount rate decreases.
c.
The number of periods the annuity is received decreases.
d.
The discount rate increases.
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The correct answer is: The discount rate decreases.
Question 3
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Which of the following will not increase a present value?
Select one:
a.
Decrease the number of periods
b.
None of these answers is correct
c.
Increase the future value
d.
Increase the interest rate
Feedback
The correct answer is: Increase the interest rate
Question 4
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Consider a series of uneven cash flows received over a period of time in the future. The present value of these cash flows will most likely be
Select one:
a.
Larger than the sum of the cash flows.
b.
Smaller than the sum of the cash flows.
c.
Equal to the sum of the cash flows.
d.
Either larger or smaller than the sum of the cash flows.
Feedback
The correct answer is: Smaller than the sum of the cash flows.
Question 5
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Assume a company’s total asset turnover is equal to 4.75. What is the correct interpretation of this ratio?
Select one:
a.
Total assets are kept on average for 4.75 days.
b.
Total assets are kept on average for 47.5 years.
c.
Each dollar of total assets generates $4.75 of sales.
d.
Total assets are kept on average for 4.75 years.
Feedback
The correct answer is: Each dollar of total assets generates $4.75 of sales.
Question 6
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This sub-area of finance looks at firm decisions in acquiring and utilizing cash received from investors or from retained earnings.
Select one:
a.
treasury management
b.
investments
c.
None of these
d.
financial management
Feedback
The correct answer is: financial management
Question 7
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present values affected by changes in interest rates?
Select one:
a.
Present values are not affected by changes in interest rates.
b.
The lower the interest rate, the larger the present value will be.
c.
The higher the interest rate, the larger the present value will be.
d.
One would need to know the future value in order to determine the impact.
Feedback
The correct answer is: The lower the interest rate, the larger the present value will be.
Question 8
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Which of the following statements is correct?
Select one:
a.
Financial managers double-check the accountant’s statements.
b.
Financial managers are focused on what happened in the past.
c.
Accountants are focused on what happened in the past.
d.
Both accountants and financial managers use total quality management systems to standardize data.
Feedback
The correct answer is: Accountants are focused on what happened in the past.
Question 9
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The present value of annuity payments made far into the future is:
Select one:
a.
worth very little today.
b.
valued as worthless as their value is not determinable.
c.
worth much more today.
d.
valued as having no time value of money.
Feedback
The correct answer is: worth very little today.
Question 10
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Which type of ratio measures a firm’s ability to pay off short-term obligations without relying on inventory sales?
Select one:
a.
Current
b.
Internal-growth
c.
Cash
d.
Quick or acid test
Feedback
The correct answer is: Quick or acid test
Question 11
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Common Equity consists of the following accounts
Select one:
a.
Common stock only
b.
Preferred stock, common stock, and retained earnings
c.
Preferred stock and common stock
d.
Common stock and retained earnings
Feedback
The correct answer is: Common stock and retained earnings
Question 12
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Which of the following is a use of cash?
Select one:
a.
The firm sells some of its fixed assets.
b.
The firm takes its depreciation expense.
c.
The firm decreases its accrued wages and taxes.
d.
The firm issues more long-term debt.
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The correct answer is: The firm decreases its accrued wages and taxes.
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Assume that for year 2015 company A has a current ratio equal to 1.5, while company B has a current ratio equal to 2.5. Based on this information we would most likely conclude that
Select one:
a.
Company A has a better liquidity position than company B.
b.
Company B is more profitable than company A.
c.
Company A is more profitable than company B.
d.
Company B has a better liquidity position than company A.
Feedback
The correct answer is: Company B has a better liquidity position than company A.
Question 14
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These are cash inflows and outflows associated with buying and selling of fixed or other long-term assets.
Select one:
a.
Cash flows from operations
b.
Cash flows from financing activities
c.
Cash flows from investing activities
d.
Net change in cash and cash equivalents
Feedback
The correct answer is: Cash flows from investing activities
Question 15
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Compounding monthly versus annually causes the interest rate to be effectively __________ , and thus the future value
Select one:
a.
Higher; is also higher.
b.
Smaller; is higher.
c.
Higher; is smaller.
d.
Smaller; is also smaller.
Feedback
The correct answer is: Higher; is also higher.
Question 16
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Financial management involves decisions about which of the following?
Select one:
a.
What type of capital should be raised
b.
How to minimize taxation
c.
All of these
d.
Which projects to fund
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The correct answer is: All of these
Question 17
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This is a general term for securities like stocks, bonds, and other assets that represent ownership in a cash flow.
Select one:
a.
financial markets
b.
financial asset
c.
real asset
d.
investment
Feedback
The correct answer is: financial asset
Question 18
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Which of the below IS NOT included in the calculation of operating income?
Select one:
a.
Depreciation expense
b.
Cost of goods sold
c.
Sales
d.
Interest expense
Feedback
The correct answer is: Interest expense
Question 19
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To move a cash flow in time from period 4 to period 6 we would need to
Select one:
a.
Divide the cash flow by a number greater than one.
b.
Cut the cash flow in half.
c.
Multiply the cash flow by a number greater than one.
d.
Square the cash flow.
Feedback
The correct answer is: Multiply the cash flow by a number greater than one.
Question 20
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Firms with high PE ratios _________.
Select one:
a.
usually have lower credit ratings
b.
usually are expected to experience rapid increases in future dividends and/or earnings growth
c.
usually have high debt ratios
d.
usually are expected to experience a slower growth rate in sales
Feedback
The correct answer is: usually are expected to experience rapid increases in future dividends and/or earnings growth
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TrineOnline Accessibility Statements
Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 2:59 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 3:23 AM |
| Time taken | 24 mins 29 secs |
| Points | 5.00/5.00 |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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Five years ago
, Jane invested $5,000 and locked in an 8 percent annual interest rate for 25 years (end 20 years from now). James can make a 20-year investment today and lock in a 10 percent interest rate. How much money should he invest now in order to have the same amount of money in 20 years as Jane?
Select one:
a.
$3,160.43
b.
$5,089.91
c.
$7,346.64
d.
$3,464.11
Feedback
The correct answer is: $5,089.91
Question 2
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You have been promised to receive $550 in 3 years. After receiving the $550 you plan to deposit it for another 3 years at a 7% interest rate. How much will you have in year 6?
Select one:
a.
$589
b.
$676
c.
$674
d.
$666
Feedback
The correct answer is: $674
Question 3
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How much do you need to deposit in your account today if you want to have $10,000 accumulated in your account in 6 years? Assume 5% interest rate.
Select one:
a.
$9,524
b.
$7,462
c.
$7,000
d.
$9,434
Feedback
The correct answer is: $7,462
Question 4
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What is the future value of $700 deposited for one year earning 4 percent interest rate annually?
Select one:
a.
$1,428
b.
$700
c.
$728
d.
$28
Feedback
The correct answer is: $728
Question 5
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What is the present value of a $500 payment in one year when the discount rate is 5 percent?
Select one:
a.
$525.00
b.
$476.19
c.
$500.00
d.
$475.00
Feedback
The correct answer is: $476.19
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FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 3:44 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 3:58 AM |
| Time taken | 13 mins 12 secs |
| Points | 5.00/5.00 |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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If you start making $115 monthly contributions today and continue them for six years, what is their present value if the compounding rate is 12 percent APR? What is the present value of this annuity?
Select one:
a.
$5,941.12
b.
$5,633.10
c.
$5,882.30
d.
$5,512.90
Feedback
The correct answer is: $5,941.12
Question 2
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What is the present value of a $500 deposit in year 1 and another $100 deposit at the end of year 4 if interest rates are 5 percent?
Select one:
a.
$582.27
b.
$480.00
c.
$493.62
d.
$558.46
Feedback
The correct answer is: $558.46
Question 3
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Consider that you are 30 years old and have just changed to a new job. You have $91,000 in the retirement plan from your former employer. You can roll that money into the retirement plan of the new employer. You will also contribute $4,800 each year into your new employer’s plan. If the rolled-over money and the new contributions both earn a 7 percent return, how much should you expect to have when you retire in 38 years?
Select one:
a.
$2,106,718.60
b.
$2,018,506.60
c.
$2,216,781.60
d.
$2,012,560.60
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The correct answer is: $2,018,506.60
Question 4
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Joey realizes that he has charged too much on his credit card and has racked up $3,000 in debt. If he can pay $150 each month and the card charges 18 percent APR (compounded monthly), how long will it take him to pay off the debt?
Select one:
a.
14.68 months
b.
23.96 months
c.
13.03 months
d.
20.00 months
Feedback
The correct answer is: 23.96 months
Question 5
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What is the present value, when interest rates are 6.5 percent, of a $100 payment made every year forever?
Select one:
a.
$6.50
b.
$1,538.46
c.
$650.00
d.
$1,000.00
Feedback
The correct answer is: $1,538.46
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FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 1:17 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 1:37 AM |
| Time taken | 20 mins 2 secs |
| Grade | 9.00 out of 10.00 (90%) |
Question 1
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How are future values affected by changes in interest rates?
Select one:
a.
Future values are not affected by changes in interest rates.
b.
The higher the interest rate, the larger the future value will be.
c.
One would need to know the present value in order to determine the impact.
d.
The lower the interest rate, the larger the future value will be.
Feedback
The correct answer is: The higher the interest rate, the larger the future value will be.
Question 2
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Time value of money concepts can be used by:
Select one:
a.
individuals doing personal financial planning.
b.
All of these are users of time value of money concepts.
c.
investors calculating a return on an investment.
d.
CFOs and CEOs to make business decisions.
Feedback
The correct answer is: All of these are users of time value of money concepts.
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How are present values affected by changes in interest rates?
Select one:
a.
Present values are not affected by changes in interest rates.
b.
The higher the interest rate, the larger the present value will be.
c.
One would need to know the future value in order to determine the impact.
d.
The lower the interest rate, the larger the present value will be.
Feedback
The correct answer is: The lower the interest rate, the larger the present value will be.
Question 4
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All of the below are correct EXCEPT:
Select one:
a.
Each individual has his/her own rate of time preference.
b.
$1 today is more valuable than $1 tomorrow
c.
Needing to assign correct values to future cash flows of companies is why we need to be able to adjust for the rate of time preference.
d.
People that value future consumption less than most of the other people will most likely end up being net lenders in the market.
Feedback
The correct answer is: People that value future consumption less than most of the other people will most likely end up being net lenders in the market.
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Which of the following is NOT true when developing a time line?
Select one:
a.
Cash inflows are designated with a positive number.
b.
Cash outflows are designated with a positive number.
c.
The time line shows the magnitude of cash flows at different points in time.
d.
The cost is known as the interest rate.
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The correct answer is: Cash outflows are designated with a positive number.
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The process of figuring out how much an amount that you expect to receive in the future is worth today is called:
Select one:
a.
multiplying.
b.
computing.
c.
discounting.
d.
compounding.
Feedback
The correct answer is: discounting.
Question 7
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Which of the following will not increase a present value?
Select one:
a.
None of these answers is correct
b.
Decrease the number of periods
c.
Increase the future value
d.
Increase the interest rate
Feedback
The correct answer is: Increase the interest rate
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Assume we want to move a cash flow from period 7 to period 5. The calculation of the new amount of the cash flow would include
Select one:
a.
Adding the interest rate to number one and raising the result to the power of 2.
b.
Raising the interest rate to the power of 2.
c.
Raising the interest rate to the power of 5.
d.
Adding the interest rate to number one and raising the result to the power of 5.
Feedback
The correct answer is: Adding the interest rate to number one and raising the result to the power of 2.
Question 9
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Which of the following statements is incorrect with respect to time lines?
Select one:
a.
A helpful tool for organizing our analysis is the time line.
b.
Cash flows we receive are called inflows and denoted with a positive number.
c.
Interest rates are not included on our time lines.
d.
Cash flows we pay out are called outflows and designated with a negative number.
Feedback
The correct answer is: Interest rates are not included on our time lines.
Question 10
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Assume you deposit $100 in an account today and that a friend of yours deposits $100 in an account of another bank, also today. In one year, you have $110 in your account and your friend has $108 in his/her account. We can conclude that
Select one:
a.
Your friend is getting a compound interest while you are getting a simple interest.
b.
One of the two banks made a mistake in calculating the interest payment.
c.
Your friend earned a higher rate of interest than you.
d.
Your friend earned a lower rate of interest than you.
Feedback
The correct answer is: Your friend earned a lower rate of interest than you.
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Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 2:59 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 3:23 AM |
| Time taken | 24 mins 29 secs |
| Points | 5.00/5.00 |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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Five years ago, Jane invested $5,000 and locked in an 8 percent annual interest rate for 25 years (end 20 years from now). James can make a 20-year investment today and lock in a 10 percent interest rate. How much money should he invest now in order to have the same amount of money in 20 years as Jane?
Select one:
a.
$3,160.43
b.
$5,089.91
c.
$7,346.64
d.
$3,464.11
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The correct answer is: $5,089.91
Question 2
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You have been promised to receive $550 in 3 years. After receiving the $550 you plan to deposit it for another 3 years at a 7% interest rate. How much will you have in year 6?
Select one:
a.
$589
b.
$676
c.
$674
d.
$666
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The correct answer is: $674
Question 3
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How much do you need to deposit in your account today if you want to have $10,000 accumulated in your account in 6 years? Assume 5% interest rate.
Select one:
a.
$9,524
b.
$7,462
c.
$7,000
d.
$9,434
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The correct answer is: $7,462
Question 4
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What is the future value of $700 deposited for one year earning 4 percent interest rate annually?
Select one:
a.
$1,428
b.
$700
c.
$728
d.
$28
Feedback
The correct answer is: $728
Question 5
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What is the present value of a $500 payment in one year when the discount rate is 5 percent?
Select one:
a.
$525.00
b.
$476.19
c.
$500.00
d.
$475.00
Feedback
The correct answer is: $476.19
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TrineOnline Accessibility Statements
Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 3:28 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 3:42 AM |
| Time taken | 14 mins |
| Grade | 9.00 out of 10.00 (90%) |
Question 1
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The effective annual rate
Select one:
a.
Can never be equal to the annual periodic rate.
b.
Will never be greater than the annual periodic rate.
c.
Will always be smaller than the annual periodic rate.
d.
Will always be at least as large as the annual periodic rate.
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The correct answer is: Will always be at least as large as the annual periodic rate.
Question 2
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You are deciding among several different bank accounts. Which of the following will generate the highest effective annual rate (EAR)?
Select one:
a.
A 6 percent rate with quarterly compounding
b.
A 6 percent rate with monthly compounding
c.
A 6 percent rate with annual compounding
d.
A 5.98 percent rate with annual compounding
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The correct answer is: A 6 percent rate with monthly compounding
Question 3
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The simple form of an annualized interest rate is called the annual percentage rate (APR). The effective annual rate (EAR) is a:
Select one:
a.
less accurate measure of the interest rate paid for monthly compounding.
b.
more accurate measure of the interest rate paid for monthly compounding.
c.
measure that only applies to mortgages.
d.
concept that is only used because the law requires it, and is of no use to a borrower.
Feedback
The correct answer is: more accurate measure of the interest rate paid for monthly compounding.
Question 4
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When computing the rate of return from selling an investment, the number of years between the present and future cash flows is an important factor in determining:
Select one:
a.
the annual payments required.
b.
the annual rate earned.
c.
whether the present value or the future value is a cash inflow.
d.
whether the present value or the future value is a cash outflow.
Feedback
The correct answer is: the annual rate earned.
Question 5
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When you get your credit card bill, if you make a payment larger than the minimum payment:
Select one:
a.
you will not affect the payoff time.
b.
you will reduce the payoff time.
c.
you are wasting your current consumption and making TVM not work for you.
d.
you will increase the payoff time.
Feedback
The correct answer is: you will reduce the payoff time.
Question 6
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The present value of annuity payments made far into the future is:
Select one:
a.
valued as having no time value of money.
b.
worth very little today.
c.
valued as worthless as their value is not determinable.
d.
worth much more today.
Feedback
The correct answer is: worth very little today.
Question 7
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Assume the present value of a series of cash flows is equal to $100,000. Which of the below would be a possible interpretation of this result?
Select one:
a.
$100,000 is the sum of the cash flows adjusted for inflation.
b.
The sum of the cash flows is equal to $100,000.
c.
If you keep depositing the cash flows in a bank they will grow to $100,000 over time.
d.
$100,000 is the maximum we should be willing to pay for this series of cash flows.
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The correct answer is: $100,000 is the maximum we should be willing to pay for this series of cash flows.
Question 8
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We should expect all of these to be true EXCEPT:
Select one:
a.
Larger present value with a smaller number of time periods
b.
Future value larger than present value
c.
Higher future value with a lower rate of interest
d.
APR equal to or smaller than EAR
Feedback
The correct answer is: Higher future value with a lower rate of interest
Question 9
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Which of the following will increase the future value of an annuity?
Select one:
a.
The interest rate increases.
b.
The number of periods increases.
c.
The amount of the annuity increases.
d.
All of these will increase the future value of an annuity.
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The correct answer is: All of these will increase the future value of an annuity.
Question 10
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Consider a series of uneven cash flows received over a period of time in the future. The present value of these cash flows will most likely be
Select one:
a.
Smaller than the sum of the cash flows.
b.
Equal to the sum of the cash flows.
c.
Either larger or smaller than the sum of the cash flows.
d.
Larger than the sum of the cash flows.
Feedback
The correct answer is: Smaller than the sum of the cash flows.
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TrineOnline Accessibility Statements
Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 4:34 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 4:47 AM |
| Time taken | 13 mins 23 secs |
| Grade | 7.00 out of 8.00 (88%) |
Question 1
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You are considering a stock investment in one of two firms (A and B), both of which operate in the same industry. A finances its $20 million in assets with $18 million in debt and $2 million in equity. B finances its $20 million in assets with $2 million in debt and $18 million in equity. Calculate the debt-to-equity ratio for the two firms.
Select one:
a.
Firm A: 9 times; Firm B: 0.11 times
b.
Firm A: 19 times; Firm B: 1.11 times
c.
Firm A: 19 times; Firm B: 0.11 times
d.
Firm A: 9 times; Firm B: 1.11 times
Feedback
The correct answer is: Firm A: 9 times; Firm B: 0.11 times
Question 2
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What is the present value of a $500 payment in one year when the discount rate is 5 percent?
Select one:
a.
$475.00
b.
$476.19
c.
$500.00
d.
$525.00
Feedback
The correct answer is: $476.19
Question 3
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Income Statement Bullseye, Inc.’s 2013 income statement lists the following income and expenses: EBIT = $900,000, interest expense = $85,000, and net income = $570,000. What are the 2013 taxes reported on the income statement?
Select one:
a.
There is not enough information to calculate 2013 taxes.
b.
$815,000
c.
$330,000
d.
$245,000
Feedback
The correct answer is: $245,000
Question 4
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Debt Management Ratios You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $100 million in assets with $90 million in debt and $10 million in equity. LotsofEquity, Inc. finances its $100 million in assets with $10 million in debt and $90 million in equity. What are the debt ratio, equity multiplier, and debt-to-equity ratio for the two firms?
Select one:
a.
LotsofDebt: 10 percent, 1.11 times, 0.1111 times, respectively; and LotsofEquity: 90 percent, 10 times, 9 times, respectively.
b.
LotsofDebt: 10 percent, 10 times, 9 times, respectively; and LotsofEquity: 90 percent, 1.11 times, 0.1111 times, respectively.
c.
LotsofDebt: 90 percent, 10 times, 9 times, respectively; and LotsofEquity: 10 percent, 1.11 times, 0.1111 times, respectively.
d.
LotsofDebt: 90 percent, 1.11 times, 0.1111 times, respectively; and LotsofEquity: 10 percent, 10 times, 9 times, respectively.
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The correct answer is: LotsofDebt: 90 percent, 10 times, 9 times, respectively; and LotsofEquity: 10 percent, 1.11 times, 0.1111 times, respectively.
Question 5
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If your company’s supplier offers you a discounted price of $200,000 if paid today, but you decide to wait with the payment for 4 years (your supplier is very patient) and pay the regular price of $300,000, you are in effect
Select one:
a.
Borrowing $200,000 at 9.67%
b.
Borrowing $200,000 at 8.67%
c.
Borrowing $200,000 at 10.67%
d.
Borrowing $200,000 at 7.67%
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The correct answer is: Borrowing $200,000 at 10.67%
Question 6
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If you start making $115 monthly contributions today and continue them for six years, what is their present value if the compounding rate is 12 percent APR? What is the present value of this annuity?
Select one:
a.
$5,941.12
b.
$5,512.90
c.
$5,633.10
d.
$5,882.30
Feedback
The correct answer is: $5,941.12
Question 7
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Statement of Cash Flows Crispy Corporation has net cash flow from financing activities for the last year of $20 million. The company paid $5 million in dividends last year. During the year, the change in notes payable on the balance sheet was an increase of $2 million, and change in common and preferred stock was an increase of $3 million. The end of year balance for long-term debt was $45 million. What was their beginning of year balance for long-term debt?
Select one:
a.
$25 million
b.
$15 million
c.
$20 million
d.
$35 million
Feedback
The correct answer is: $25 million
Question 8
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What is the present value of a $500 deposit in year 1 and another $100 deposit at the end of year 4 if interest rates are 5 percent?
Select one:
a.
$493.62
b.
$480.00
c.
$582.27
d.
$558.46
Feedback
The correct answer is: $558.46
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TrineOnline Accessibility Statements
Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 5:52 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 6:00 AM |
| Time taken | 7 mins 30 secs |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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To move a cash flow in time from period 4 to period 6 we would need to
Select one:
a.
Square the cash flow.
b.
Cut the cash flow in half.
c.
Divide the cash flow by a number greater than one.
d.
Multiply the cash flow by a number greater than one.
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The correct answer is: Multiply the cash flow by a number greater than one.
Question 2
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Time value of money concepts can be used by:
Select one:
a.
All of these are users of time value of money concepts.
b.
CFOs and CEOs to make business decisions.
c.
investors calculating a return on an investment.
d.
individuals doing personal financial planning.
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The correct answer is: All of these are users of time value of money concepts.
Question 3
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How are present values affected by changes in interest rates?
Select one:
a.
Present values are not affected by changes in interest rates.
b.
The higher the interest rate, the larger the present value will be.
c.
One would need to know the future value in order to determine the impact.
d.
The lower the interest rate, the larger the present value will be.
Feedback
The correct answer is: The lower the interest rate, the larger the present value will be.
Question 4
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A dollar paid (or received) in the future is
Select one:
a.
not worth as much as a dollar paid (or received) today.
b.
worth as much as a dollar paid (or received) today.
c.
worth more than a dollar paid (or received) today.
d.
not comparable to a dollar paid (or received) today.
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The correct answer is: not worth as much as a dollar paid (or received) today.
Question 5
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Tracy invested $1,000 five years ago and earns 4 percent interest on her investment. By leaving her interest earnings in her account, she increases the amount of interest she earns each year. The way she is handling her interest income is referred to as which one of the following?
Select one:
a.
aggregation
b.
accumulation
c.
compounding
d.
simplifying
Feedback
The correct answer is: compounding
Question 6
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Which of the following statements is incorrect with respect to time lines?
Select one:
a.
Interest rates are not included on our time lines.
b.
Cash flows we pay out are called outflows and designated with a negative number.
c.
Cash flows we receive are called inflows and denoted with a positive number.
d.
A helpful tool for organizing our analysis is the time line.
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The correct answer is: Interest rates are not included on our time lines.
Question 7
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Sue and Neal are twins. Sue invests $5,000 at 7 percent when she is 25 years old. Neal invests $5,000 at 7 percent when he is 30 years old. Both Sue and Neal retire at age 60. Which one of the following statements is correct assuming that neither Sue nor Neal has withdrawn any money from their accounts?
Select one:
a.
If both Sue and Neal wait to age 70 to retire, then they will have equal amounts of savings.
b.
Neal will earn more interest on interest than Sue.
c.
Sue will have more money than Neal as long as they retire at the same time.
d.
Sue will have less money when she retires than Neal.
Feedback
The correct answer is: Sue will have more money than Neal as long as they retire at the same time.
Question 8
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Which of the following is NOT true when developing a time line?
Select one:
a.
Cash outflows are designated with a positive number.
b.
Cash inflows are designated with a positive number.
c.
The time line shows the magnitude of cash flows at different points in time.
d.
The cost is known as the interest rate.
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The correct answer is: Cash outflows are designated with a positive number.
Question 9
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All of the below are correct EXCEPT:
Select one:
a.
People that value future consumption less than most of the other people will most likely end up being net lenders in the market.
b.
Each individual has his/her own rate of time preference.
c.
Needing to assign correct values to future cash flows of companies is why we need to be able to adjust for the rate of time preference.
d.
$1 today is more valuable than $1 tomorrow
Feedback
The correct answer is: People that value future consumption less than most of the other people will most likely end up being net lenders in the market.
Question 10
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Compounding interest means the following:
Select one:
a.
The interest rate is determined by the borrower, not the lender.
b.
Two different interest rates are used for the same loan.
c.
Dividing the interest into components.
d.
Interest is earned not only on the initial balance, but also on previously received interest payments.
Feedback
The correct answer is: Interest is earned not only on the initial balance, but also on previously received interest payments.
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Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 6:05 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 6:11 AM |
| Time taken | 6 mins 11 secs |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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Compounding monthly versus annually causes the interest rate to be effectively __________ , and thus the future value
Select one:
a.
Higher; is also higher.
b.
Smaller; is also smaller.
c.
Smaller; is higher.
d.
Higher; is smaller.
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The correct answer is: Higher; is also higher.
Question 2
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When moving from the left to the right of a time line, we are using:
Select one:
a.
compound interest to calculate future values.
b.
only payments to calculate future values.
c.
simple interest to calculate future values.
d.
discounted cash flows to calculate present values.
Feedback
The correct answer is: compound interest to calculate future values.
Question 3
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Assume the present value of a series of cash flows is equal to $100,000. Which of the below would be a possible interpretation of this result?
Select one:
a.
The sum of the cash flows is equal to $100,000.
b.
$100,000 is the sum of the cash flows adjusted for inflation.
c.
$100,000 is the maximum we should be willing to pay for this series of cash flows.
d.
If you keep depositing the cash flows in a bank they will grow to $100,000 over time.
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The correct answer is: $100,000 is the maximum we should be willing to pay for this series of cash flows.
Question 4
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You are deciding among several different bank accounts. Which of the following will generate the highest effective annual rate (EAR)?
Select one:
a.
A 5.98 percent rate with annual compounding
b.
A 6 percent rate with monthly compounding
c.
A 6 percent rate with quarterly compounding
d.
A 6 percent rate with annual compounding
Feedback
The correct answer is: A 6 percent rate with monthly compounding
Question 5
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Which of the following will increase the future value of an annuity?
Select one:
a.
The interest rate increases.
b.
The number of periods increases.
c.
All of these will increase the future value of an annuity.
d.
The amount of the annuity increases.
Feedback
The correct answer is: All of these will increase the future value of an annuity.
Question 6
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When you get your credit card bill, if you make a payment larger than the minimum payment:
Select one:
a.
you will increase the payoff time.
b.
you will reduce the payoff time.
c.
you will not affect the payoff time.
d.
you are wasting your current consumption and making TVM not work for you.
Feedback
The correct answer is: you will reduce the payoff time.
Question 7
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The effective annual rate
Select one:
a.
Will always be at least as large as the annual periodic rate.
b.
Will always be smaller than the annual periodic rate.
c.
Will never be greater than the annual periodic rate.
d.
Can never be equal to the annual periodic rate.
Feedback
The correct answer is: Will always be at least as large as the annual periodic rate.
Question 8
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When saving for future expenditures, we can add the ________ of contributions over time to see what the total will be worth at some point in time.
Select one:
a.
payment
b.
present value
c.
future value
d.
time value to money
Feedback
The correct answer is: future value
Question 9
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A perpetuity, a special form of annuity, pays cash flows:
Select one:
a.
continuously for one year.
b.
that do not have time value of money implications.
c.
periodically forever.
d.
and is not effected by interest rate changes.
Feedback
The correct answer is: periodically forever.
Question 10
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Consider a series of uneven cash flows received over a period of time in the future. The present value of these cash flows will most likely be
Select one:
a.
Smaller than the sum of the cash flows.
b.
Either larger or smaller than the sum of the cash flows.
c.
Larger than the sum of the cash flows.
d.
Equal to the sum of the cash flows.
Feedback
The correct answer is: Smaller than the sum of the cash flows.
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TrineOnline Accessibility Statements
Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 6:11 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 6:23 AM |
| Time taken | 11 mins 22 secs |
| Points | 4.00/5.00 |
| Grade | 8.00 out of 10.00 (80%) |
Question 1
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What is the future value of an $800 annuity payment over 15 years if the interest rates are 6 percent?
Select one:
a.
$12,720.00
b.
$7,002.99
c.
$18,620.78
d.
$1,917.25
Feedback
The correct answer is: $18,620.78
Question 2
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Assume you deposit $400 in an account, and that in 7 years you have $700. Assuming monthly compounding frequency what is the quoted annual interest rate associated with the account?
Select one:
a.
8.32%
b.
8.02%
c.
10.71%
d.
42.86%
Feedback
The correct answer is: 8.02%
Question 3
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You wish to buy a $30,000 car. The dealer offers you a 5-year loan with a 9 percent APR. What are the monthly payments? What is the monthly payment if you paid interest only?
Select one:
a.
$701.23; $291.23
b.
$659.41; $291.23
c.
$712.03; $271.19
d.
$622.75; $225.00
Feedback
The correct answer is: $622.75; $225.00
Question 4
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You wish to buy a $20,000 car. The dealer offers you a 5-year loan with an 8 percent APR. What are the monthly payments?
Select one:
a.
$4,080.35
b.
$272.19
c.
$333.33
d.
$405.53
Feedback
The correct answer is: $405.53
Question 5
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What is the present value of a $300 annuity payment over 5 years if interest rates are 8 percent?
Select one:
a.
$440.80
b.
$1,197.81
c.
$204.17
d.
$1,938.96
Feedback
The correct answer is: $1,197.81
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TrineOnline Accessibility Statements
Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 6:24 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 6:28 AM |
| Time taken | 3 mins 50 secs |
| Points | 5.00/5.00 |
| Grade | 10.00 out of 10.00 (100%) |
Question 1
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If you start making $115 monthly contributions today and continue them for six years, what is their present value if the compounding rate is 12 percent APR? What is the present value of this annuity?
Select one:
a.
$5,633.10
b.
$5,882.30
c.
$5,941.12
d.
$5,512.90
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The correct answer is: $5,941.12
Question 2
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What is the present value, when interest rates are 6.5 percent, of a $100 payment made every year forever?
Select one:
a.
$1,000.00
b.
$6.50
c.
$1,538.46
d.
$650.00
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The correct answer is: $1,538.46
Question 3
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Monica has decided that she wants to build enough retirement wealth that, if invested at 7 percent per year, will provide her with $3,000 monthly income for 30 years. To date, she has saved nothing, but she still has 20 years until she retires. How much money does she need to contribute per month to reach her goal?
Select one:
a.
$671.78
b.
$7,025.77
c.
$3,000.00
d.
$865.62
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The correct answer is: $865.62
Question 4
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Compute the future value in year 10 of a $1,000 deposit in year 1 and another $1,500 deposit at the end of year 4 using an 8 percent interest rate.
Select one:
a.
$3,120.73
b.
$4,500.00
c.
$5,397.31
d.
$4,379.31
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The correct answer is: $4,379.31
Question 5
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What is the interest rate of a 4-year, annual $1,000 annuity with present value of $3,500?
Select one:
a.
5.56 percent
b.
9.70 percent
c.
3.85 percent
d.
8.84 percent
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The correct answer is: 5.56 percent
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Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 6:28 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 6:49 AM |
| Time taken | 20 mins 29 secs |
| Grade | 19.00 out of 20.00 (95%) |
Question 1
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We call the process of earning interest on both the original deposit and on the earlier interest payments:
Select one:
a.
simple interest.
b.
future value.
c.
discounting.
d.
compounding.
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The correct answer is: compounding.
Question 2
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Which of the following is an example of aligning managers’ personal interests with those of the owners?
Select one:
a.
Allow the managers to have as many perks as they request.
b.
Pay the managers high salaries.
c.
Offer the managers shares of common stock of the firm.
d.
Trust the managers’ actions as they will always act in the owners’ best interest.
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The correct answer is: Offer the managers shares of common stock of the firm.
Question 3
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Items on the balance sheet are usually listed
Select one:
a.
In the order of liquidity.
b.
Arranged from the largest dollar value to the lowest dollar value.
c.
In alphabetical order.
d.
With revenues on the top and net income at the bottom.
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The correct answer is: In the order of liquidity.
Question 4
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Which of the following statements is correct?
Select one:
a.
A low average payment period and a high accounts payable turnover are a sign of good management.
b.
A high average payment period and a high accounts payable turnover are a sign of good management.
c.
A low average payment period and a low accounts payable turnover are a sign of good management.
d.
A high average payment period and a low accounts payable turnover are a sign of good management.
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The correct answer is: A high average payment period and a low accounts payable turnover are a sign of good management.
Question 5
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All of the following are advantages to organizing as a corporation except ____.
Select one:
a.
Limited liability
b.
Double taxation
c.
Easy to transfer ownership
d.
Easy access to capital
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The correct answer is: Double taxation
Question 6
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Assume that company X had accounts receivable turnover equal to 12 in 2014, and equal to 14 in 2015. Further assume that the relevant industry average for this ratio is 20. Based on this information we would most likely conclude that company X
Select one:
a.
Should be more careful with awarding credit to its customers, or should improve its collecting of accounts receivable.
b.
Should cut the cost of its materials in production in order to improve its profitability.
c.
Should increase its gross profit margin by raising the price of the product it sells.
d.
Should repay some of its debt in order to lower its interest expense.
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The correct answer is: Should be more careful with awarding credit to its customers, or should improve its collecting of accounts receivable.
Question 7
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All of the below are correct EXCEPT:
Select one:
a.
$1 today is more valuable than $1 tomorrow
b.
Needing to assign correct values to future cash flows of companies is why we need to be able to adjust for the rate of time preference.
c.
Each individual has his/her own rate of time preference.
d.
People that value future consumption less than most of the other people will most likely end up being net lenders in the market.
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The correct answer is: People that value future consumption less than most of the other people will most likely end up being net lenders in the market.
Question 8
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Assume $500 to be received in year 3 has a present value equal to $400. If we keep the same interest rate assumption, but instead assume that the $500 is received in year 2 we know that the resulting present value must be
Select one:
a.
Equal to $400.
b.
Smaller than $400.
c.
Larger than $400.
d.
Larger than $500.
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The correct answer is: Larger than $400.
Question 9
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The portion of a company’s profits that are kept by the company rather than distributed to the stockholders as cash dividends is referred to as _______________.
Select one:
a.
Restricted earnings
b.
Retained earnings
c.
Venture capital
d.
Institutional investment
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The correct answer is: Retained earnings
Question 10
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GW Inc. had $800 million in retained earnings at the beginning of the year. During the year, the firm paid $0.75 per share dividend and generated $1.92 earnings per share. The firm has 100 million shares outstanding. At the end of year, what was the level of retained earnings for GW?
Select one:
a.
$807 million
b.
$917 million
c.
$882 million
d.
$725 million
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The correct answer is: $917 million
Question 11
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Which of the following refer to ratios that measure the relationship between a firm’s liquid (or current) assets and its current liabilities?
Select one:
a.
Internal growth
b.
Liquidity
c.
Market value
d.
Cross-section
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The correct answer is: Liquidity
Question 12
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When you get your credit card bill, if you make a payment larger than the minimum payment:
Select one:
a.
you will reduce the payoff time.
b.
you will not affect the payoff time.
c.
you will increase the payoff time.
d.
you are wasting your current consumption and making TVM not work for you.
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The correct answer is: you will reduce the payoff time.
Question 13
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Which of the following statements is correct?
Select one:
a.
It is relatively easy for sole proprietorships to raise money.
b.
Sole proprietorships are difficult to start.
c.
Profits from the sole proprietorship are subject to double taxation.
d.
If the sole proprietorship gets sued, the owner is liable.
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The correct answer is: If the sole proprietorship gets sued, the owner is liable.
Question 14
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Tracy invested $1,000 five years ago and earns 4 percent interest on her investment. By leaving her interest earnings in her account, she increases the amount of interest she earns each year. The way she is handling her interest income is referred to as which one of the following?
Select one:
a.
simplifying
b.
aggregation
c.
accumulation
d.
compounding
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The correct answer is: compounding
Question 15
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Financial management involves decisions about which of the following?
Select one:
a.
All of these
b.
How to minimize taxation
c.
What type of capital should be raised
d.
Which projects to fund
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The correct answer is: All of these
Question 16
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Compounding monthly versus annually causes the interest rate to be effectively __________ , and thus the future value
Select one:
a.
Higher; is smaller.
b.
Smaller; is also smaller.
c.
Smaller; is higher.
d.
Higher; is also higher.
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The correct answer is: Higher; is also higher.
Question 17
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The difference between ROE and ROA is that
Select one:
a.
ROE takes into account depreciation expense.
b.
ROA takes into account depreciation expense.
c.
ROE takes into account the impact of financial leverage.
d.
ROA takes into account the impact of financial leverage.
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The correct answer is: ROE takes into account the impact of financial leverage.
Question 18
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An equity-financed firm will
Select one:
a.
pay less in income taxes than an otherwise identical debt-financed firm.
b.
pay more in income taxes than an otherwise identical debt-financed firm.
c.
pay more in interest payments than an otherwise identical debt-financed firm.
d.
pay the same in income taxes as an otherwise identical debt-finance firm.
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The correct answer is: pay more in income taxes than an otherwise identical debt-financed firm.
Question 19
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Which of the following will increase the present value of an annuity?
Select one:
a.
The discount rate decreases.
b.
The discount rate increases.
c.
The final payment diminishes.
d.
The number of periods the annuity is received decreases.
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The correct answer is: The discount rate decreases.
Question 20
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When computing the rate of return from selling an investment, the number of years between the present and future cash flows is an important factor in determining:
Select one:
a.
the annual payments required.
b.
whether the present value or the future value is a cash outflow.
c.
whether the present value or the future value is a cash inflow.
d.
the annual rate earned.
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The correct answer is: the annual rate earned.
TrineOnline Accessibility Statements
Trine | Moodle
FIN–5063-OL1–OL-FA-2021 – Corporate Finance
| Started on | Sunday, September 12, 2021, 6:53 AM |
| State | Finished |
| Completed on | Sunday, September 12, 2021, 7:10 AM |
| Time taken | 17 mins |
| Grade | 8.00 out of 8.00 (100%) |
Question 1
Correct
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Question text
What is the interest rate of a 4-year, annual $1,000 annuity with present value of $3,500?
Select one:
a.
3.85 percent
b.
5.56 percent
c.
8.84 percent
d.
9.70 percent
Feedback
The correct answer is: 5.56 percent
Question 2
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If you deposit $700 in an account today at 4% annual interest rate, 8 years from today you will have __________ in your account.
Select one:
a.
$756
b.
$958
c.
$728
d.
$924
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The correct answer is: $958
Question 3
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Five years ago, sales were $4 million. Today your company’s sales are $10 million. What annual rate have sales been growing?
Select one:
a.
20.11 percent
b.
1.5 percent
c.
16.65 percent
d.
12.65 percent
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The correct answer is: 20.11 percent
Question 4
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Statement of Cash Flows Paige’s Properties Inc. reported 2013 net income of $5 million and depreciation of $1,500,000. The top part Paige’s Properties, Inc.’s 2012 and 2013 balance sheets is listed as follows (in millions of dollars).
What is the 2013 net cash flow from operating activities for Paige’s Properties, Inc.?
Select one:
a.
$5,000,000
b.
$6,500,000
c.
-$13,500,000
d.
$1,500,000
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The correct answer is: $1,500,000
Question 5
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Income Statement Bullseye, Inc.’s 2013 income statement lists the following income and expenses: EBIT = $900,000, interest expense = $85,000, and net income = $570,000. What are the 2013 taxes reported on the income statement?
Select one:
a.
$245,000
b.
$815,000
c.
There is not enough information to calculate 2013 taxes.
d.
$330,000
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The correct answer is: $245,000
Question 6
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You wish to buy a $20,000 car. The dealer offers you a 5-year loan with an 8 percent APR. What are the monthly payments?
Select one:
a.
$333.33
b.
$405.53
c.
$272.19
d.
$4,080.35
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The correct answer is: $405.53
Question 7
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Liquidity Ratios You are evaluating the balance sheet for Blue Jays Corporation. From the balance sheet you find the following balances: cash and marketable securities = $200,000, accounts receivable = $800,000, inventory = $1,000,000, accrued wages and taxes = $250,000, accounts payable = $400,000, and notes payable = $300,000. What are Blue Jays’ current ratio, quick ratio, and cash ratio, respectively?
Select one:
a.
1.05263, 1.05263, 0.21053
b.
2.10526, 1.05263, 0.21053
c.
3.07692, 1.53846, 0.30769
d.
3.07692, 1.05263, 0.30769
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The correct answer is: 2.10526, 1.05263, 0.21053
Question 8
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A firm reported year-end sales of $20 million. It listed $7 million of inventory on its balance sheet. Using a 365-day year, how many days did the firm’s inventory stay on the premises?
Select one:
a.
127.75 days
b.
97.75 days
c.
87.75 days
d.
157.75 days
Feedback
The correct answer is: 127.75 days
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