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1) bavarian sausage just issued a 10-year 12% coupon bond. the face value of the bond
is $1,000 and the bond makes semiannual coupon payments. if the bond is trading at
$867.25, what is the bonds yield to maturity?
a.12.00%
b.12.37%
c.14.56%
d.10.86%
2) narrbegin: sawtooth eoq
sawtooth industries
sawtooth industries uses an economic order quantity (eoq) model to manage its
inventory investment. the company uses about 25,000 molded plastic assemblies each
year. order costs for these are $150 per order, while carrying costs are about $250 per
unit per year. assume a 365 day year.
narrend
what is sawtooths total cost at the eoq?
a.$43,375
b.$21,750
c.$49,025
d.$46,000
3) in the abc system, inventory is categorized based upon:
a.volume
b.color
c.dollar investment
d.none of the above
4) funds that have been sent by the payer, but are not yet usable by the payee are called
a.tax balance
b.ledger balance
c.float
d.none of the above
5) narrbegin: bulldog industries
bulldog industries
an analyst seeks to determine the value of bulldog industries. after careful research, the
analyst believes that free cash flows for the firm will be $80 million in 2004 and will
grow at 10% for 2005 and 2006. the free cash flows will grow at a rate of 5% after
2006.
narrend
the market value of bulldog industries debt and preferred stock is $934 million. if the
firm has a weighted average cost of capital of 10%, find the equity value of the firms
stock. the firm has 50 million shares of stock outstanding. (assume that we are at
january 1, 2004)
a.$14.63
b.$16.23
c.$17.03
d.$22.63
6) which of the following is not a popular growth target?
a.return on investment
b.economic value added
c.market value added
d.growth in sales or assets
7) the benefit(s) of a lock box system include
a.reduction of mail float
b.reduction of processing float
c.reduction of availability float
d.all of the above
8) which law did congress pass in 2002 to enforce ethical behavior in corporate
finance?
a.the jobs and growth relief reconciliation act
b.the financial services modernization act
c.the patriot act
d.the sarbanes-oxley act
9) narrbegin: millers drugstore
millers drugstore
millers drugstore has an ebit of $15,000, debt with a market value of $25,000 and a
required return on assets of 12%.
narrend
assuming no taxes, what is millers drugstores value?
a.$15,000
b.$125,000
c.$25,000
d.$75,000
10) smith enterprises reports earnings per share for 2004 of $3.75 and dividends per
share for the same year of $1.65. what is smiths dividend payout ratio?
a.44%
b.56%
c.36%
d.64%
