Holly Farms has sales of $581,600, costs of $479,700, depreciation expense of $32,100,
and interest paid of $8,400. The tax rate is 42 percent. How much net income did the
firm earn for the period?
A. $25,788
B. 35,612
C. $43,380
D. $45,671
E. $45,886
Discounted cash flow valuation is the process of discounting an investments:
A. assets.
B. future profits.
C. liabilities.
D. costs.
E. future cash flows.
The Space and Rocket Center takes an average of 55 days to sell its inventory and an
average of 2.5 days to collect payment on its sales. What is the inventory turnover rate?
A. 6.64
B. 7.29
C. 8.68
D. 10.18
E. 22.00
Suppose the spot exchange rate for the Hungarian forint is HUF 238. Interest rates in
the United States are 4.1 percent per year. They are 3.6 percent in Hungary. What do
you predict the exchange rate will be in three years?
A. HUF 234.45
B. HUF 236.90
C. HUF 241.59
D. HUF 236.81
E. HUF 239.19
A firm offers terms of 2/5, net 30. What effective annual interest rate does the firm earn
when a customer does not take the discount?
A. 21.69 percent
B. 24.42 percent
C. 28.97 percent
D. 31.08 percent
E. 34.31 percent
The market where euros, pesos, dollars, and pounds are traded is referred to as which
one of the following?
A. ADR market
B. LIBOR market
C. Gilt market
D. Euromarket
E. Foreign exchange market
Which one of the following is an example of a perpetuity?
A. Trust income of $1,200 a year forever
B. Retirement pay of $2,200 a month for 20 years
C. Lottery winnings of $1,000 a month for life
D. Car payment of $260 a month for 60 months
E. Apartment rent payment of $800 a month for one year
Which one of the following indicates that a project is definitely acceptable?
A. Profitability index greater than 1.0
B. Negative net present value
C. Modified internal rate return that is lower than the requirement
D. Zero internal rate of return
E. Positive average accounting return
For the past six years, the price of Slippery Rock stock has been increasing at a rate of
9.6 percent a year. Currently, the stock is priced at $67 a share and has a required return
of 14 percent. What is the dividend yield?
A. 1.20 percent
B. 2.75 percent
C. 3.49 percent
D. 4.28 percent
E. 4.40 percent
Which one of the following analytical methods is based on net income?
A. Profitability index
B. Internal rate of return
C. Average accounting return
D. Modified internal rate of return
E. Payback
Mark is analyzing a proposed project to determine how changes in the variable costs
per unit would affect the projects net present value. What type of analysis is Mark
conducting?
A. Sensitivity analysis
B. Erosion planning
C. Scenario analysis
D. Benefit-cost analysis
E. Opportunity cost analysis