Tennessee Valley Antiques would like to issue new equity shares if its cost of equity
declines to 10.5 percent. The company pays a constant annual dividend of $1.80 per
share. What does the market price of the stock need to be for the firm to issue the new
shares?
A. $14.48
B. $14.83
C. $17.14
D. $17.92
E. $18.80
Which one of the following is a website that enables Lester to sell his shares of ABC
stock directly to Marti?
A. SuperDOT
B. POST
C. ECN
D. SEAT
E. eNET
Titans, Inc. has 6 percent bonds outstanding that mature in 14 years. The bonds pay
interest semiannually and have a face value of $1,000. Currently, the bonds are selling
for $993 each. What is the firms pretax cost of debt?
A. 5.97 percent
B. 6.08 percent
C. 6.14 percent
D. 6.31 percent
E. 6.40 percent
Over the past year, a firm decreased its current assets and increased its current
liabilities. As a result, the firms net working capital:
A. had to increase.
B. had to decrease.
C. could have remained constant if the amount of the decrease in current assets equaled
the amount of the increase in current liabilities.
D. could have either increased, decreased, or remained constant.
E. was unaffected as the changes occurred in the firms current accounts.
The Universal Network has sales of $496,500, cost of goods sold of $264,900, and
inventory of $87,100. What is the inventory turnover rate?
A. 1.33
B. 3.04
C. 5.70
D. 7.14
E. 8.47
Which one of the following is a payment of either cash or shares of stock that is paid
out of earnings to a firms shareholders?
A. Interest
B. Distribution
C. Retained earnings
D. Dividend
E. Stock repurchase
Maria is the sole proprietor of an antique store that she has operated at the same
location for the past 16 years. The store rents the space in which it is located but does
own all of the inventory and fixtures. The store has an outstanding loan with the local
bank but no other debt obligations. There are no specific loan covenants or assets
pledged as security for the loan. Due to a sudden and unexpected downturn in the
economy, the store is unable to generate sufficient funds to pay the loan payments due
to the bank. Which of the following options does the bank have to collect the money it
is owed?I. Sell the inventory and use the cash raised to apply to the debtII. Sell the store
fixtures and use the cash raised to apply to the debtIII. Take funds from Maria€s
personal account at the bank to pay the store€s debtIV. Sell any assets Maria personally
owns and apply the proceeds to the store€s debt
A. I only
B. III only
C. I and II only
D. I, II, and III only
E. I, II, III, and IV
You own 100 of the 15,000 outstanding shares of Delta Movers stock. The firm just
announced that it will be issuing an additional 5,000 shares to the general public in a
cash offer at $22 per share. What type of event are you participating in if you opt to
purchase 100 of these additional shares?
A. Dutch auction
B. Seasoned equity offering
C. Private placement
D. IPO
E. Rights offer
What is the net present value of a project with the following cash flows if the discount
rate is 15 percent?
A. $39.80
B. $42.97
C. $44.16
D. $48.21
E. $48.30
Marys Baked Goods has 20,000 shares of stock outstanding at a market price of $25.00
per share. What will the price per share be after the firm declares a 6 percent stock
dividend? Ignore taxes and market imperfections.
A. $22.90
B. $23.58
C. $25.00
D. $25.31
E. $25.40
You just won a contest! You will receive $100,000 a year for 20 years, starting today. If
you can earn 12 percent on your investments, what are your winnings worth today?
A. $750,000.00
B. $833,333.33
C. $836,577.69
D. $850,000.00
E. $887,450.72
Which of the following will tend to increase the credit period?I. Increase in the buyers
inventory periodII. Decrease in the buyers inventory periodIII. Increase in the buyers
operating cycleIV. Decrease in the buyers operating cycle
A. I and III only
B. I and IV only
C. II and III only
D. II and IV only
E. II only