1) narrbegin: panama city
panama city beach company
panama city beach company needs to raise $60 million of new equity capital. its
common stock is currently selling for $70 per share. the investment bankers require an
underwriting spread of 5 percent of the offering price, and the companys legal,
accounting, and printing expenses associated with the seasoned offering are estimated
to be $200,000.
narrend
refer to panama city beach company. how many shares must be sold to net $60 million?
a.905,263
b.902,256
c.885,715
d.857,143
2) your firm is expected to have $15,000,000 in sales next year and its cost of capital is
13.5%. how many days of float will a lockbox system have to save you in order to pay
for a system that will cost your firm $27,740 per year?
a.2 days
b.3 days
c.4 days
d.5 days
3) if a firm is contemplating a relaxation of its credit standards, which of the following
might be expected to result?
a.decreased unit sales
b.increased contribution margin
c.increased investment in accounts receivable
d.decreased bad debt expense
4) consider the adjusted closing prices for ma stock
what is the variance of returns for ma stock?
a.0.003
b.0.004
c.0.060
d.0.052
5) which approach estimates npv by taking a distribution of values for each of the
models assumptions?
a.forecasting simulation
b.monte carlo simulation
c.sensitivity analysis
d.scenario analysis
6) which of the following cannot be calculated?
a.present value of an annuity
b.future value of an annuity
c.present value of a perpetuity
d.future value of a perpetuity
7) when one firm sells an asset to another for cash and then leases the asset from its
new owner, it is known as a:
a.direct lease
b.sale-leaseback arrangement
c.leveraged lease
d.none of the above
8) narrbegin: bavarian brew eps
bavarian brew eps
bavarian brew, an unlevered firm, has a perpetual ebit of $500,000. the required return
on assets for the firms assets is 10%. the company has 250,000 shares outstanding,
trading at $20 per share. the company is considering raising $1 million in debt with a
required return of 6% and would use the proceeds to repurchase 50,000 shares of
outstanding stock.
narrend
what are bavarian brews earnings per share after the restructuring? assume corporate
taxes of 34%.
a.$1.32
b.$1.35
c.$1.42
d.$1.45
9) when a firm cannot invest in every positive npv project because of limited funds, this
is known as:
a.capital budgeting
b.capital investing
c.capital rationing
d.capital financing
10) antitrust “all-or-none” rules that disallow a partial tender offer/acquisition of a
company and the ability to control that company with less than 100% ownership are
known as:
a.fair price provisions
b.cash-out statutes
c.greenfield provisions
d.antitrust provisions
e.greenmail statutes
11) which of the following is not considered a weakness of the sole proprietorship?
a.limited life
b.unlimited personal liability
c.simplicity
d.limited access to capital
12) with regard to planning, the first priority for a firm that competes by achieving
lowest cost production might be
a.to determine whether it should make additional investments in order to achieve even
greater production efficiencies
b.to assess whether new or expanded marketing programs might increase the value of
the brand relative to those of competitors
c.to intensify its efforts to further discriminate its brand from that of its competitors
d.all of the above
13) narrbegin: efn 1
narrend
if sales are expected to grow at 15% what are smiths retained earnings next year?
assume a constant profit margin and a dividend payout ratio of 50%.
a.$123.05
b.$246.10
c.$213.99
d.$102.47