1) what percentage of publically held firms in the u.s after experiencing financial
distress delist?
a.100%
b.57%
c.19%
d.24%
2) roxy is buying a house and the mortgage terms are 30 years, monthly payments. if
the interest rate is 7% (apr), the loan is $300,000 loan, what is the amount of the interest
in the fifth payment?
a.$1995.90
b.$1425.64
c.$1744.21
d.$ 139.65
3) what should be the objective of a focus on stakeholders?
a.maximize the stakeholders interests
b.in situations of conflict pick stakeholders interests over shareholders interests
c.preserve stakeholders interests
d.disregard shareholders interests all together
4) if you have an increase in accounts recieveable of $10,000; an increase in inventory
of $15,000; and an increase in accounts payable of $4,000, what is the change in net
working capital?
a. $ 29,000.00
b. $ 21,000.00
c. $ (19,000.00)
d. $ (21,000.00)
5) thompson manufacturing must choose between two types of furnaces to install.
model a has a 6-year life, and an npv of $5,000. model b has a 5-year life, and an npv of
$4,200. the relevant discount rate is 12%. which model should be chosen? whats the
annual cash flow from that model?
a.model b; $1,165
b.model b; $840
c.model a; $833
d.model a; $1,216
6) entrepreneurial growth companies
a.usually consume more cash than they generate
b.usually have tangible assets as a large part of their values
c.usually have low risk for investors
d.usually compensate employees with large salaries
7) emma is buying a house and the mortgage terms are 30 years, monthly payments. if
the interest rate is 6% (apr), the loan is $200,000 loan, but emma will make $300 a
month in addition to the required payment, what will the life of the loan be?
a.220 months
b.360 months
c.290 months
d.185 months
8) narrbegin: bavarian sausage scenario
bavarian sausage scenario
bavarian sausage is considering starting the production of a new chocolate filled
sausage. the company is not sure yet what the exact sales potential and costs of the
product will be. bavarian sausage has determined the following three possible
scenarios:
narrend
how much would bavarian sausage have to charge per unit in the most likely scenario to
break even if they expected to be able to sell 1,000 units (everything else being equal)?
a.$7
b.$7.50
c.$8.50
d.$6.50
9) stock market evidence reveals
a.target shareholders receive larger premia in mergers than tender offers
b.target shareholders returns have decreased over time
c.target shareholders receive larger premia when there are multiple bidders
d.target shareholders receive smaller premia when target management resists
10) consider the following macrs table for a 5-year asset. if an asset is purchased for
$100,000; with a shipping and istallation cost of $10,000 and an expected salvage value
of $20,000; what is the depreciation expense in the second year?
a. $ 35,200.00
b. $ 32,000.00
c. $ 28,800.00
d. $ 25,600.00
11) a firm with a particular operating expertise merges with a firm with another
operating strength to create a company that has expertise in multiple areas
a.economies of scale
b.economies of scope
c.resource complementarities
d.synergy
12) mayfield development, llc forecasts the following cash flows at the beginning of
each year for a project. if the firm’s discount rate is 9%, what is the present value of the
project?
a.$7,634,980
b.$8,736,914
c.$9,523,236
d.$12,268,998
13) emma is considering a new cat nip factory with the following cash flows, what is
the payback?
a.5.4
b.5.0
c.6.0
d.5.2
14) since the tax relief act of 2003, if a corporation has pre-tax earnings of $110,000
while the corporation is subject to a 35% income tax rate and an investor is subject to a
35% personal tax rate and a 15% capital gains tax rate, then what is the after-tax income
that the investor could capture if all of the firms earnings are paid out in dividends?
a.$93,500
b.$71,500
c.$60,775
d.$46,475
15) you are currently borrowing $100,000,000 based upon a floating rate of libor + 1%.
you would like to borrow the same amount with a fixed rate of 7%. which interest rate
swap will achieve that end?
a.receive libor and pay 6%
b.receive (libor +2%) and pay 8%
c.receive (libor +2%) and pay 9%
d.a and b above
16) the most important law governing the sale of new securities is
a.the glass-steagall act
b.the securities act of 1933
c.the securities and exchange commission act of 1934
d.none of the above
17) lord brack has recently sold 90% of his company to the general public but he
remains the ceo of the firm. unfortunately, the lord prefers to eat $1,000 lunches in the
corporate dining room (for which he does not reimburse the company). what is lord
bracks cost of these lunches?
a.$1,000
b.$900
c.$100
d.none of the above
18) a firm issues a bond which is secured by a building that the firm will buy with the
loan proceeds. what type of bond has the firm issued?
a.debenture
b.income bond
c.mortgage bond
d.none of the above
19) narrbegin: extruded elements
extruded elements
extruded elements had net income of $25,000,000 last year, and $26,250,000 this year
(in line with its long-term earnings growth rate). there are 4,000,000 shares outstanding,
and the firm follows a policy of paying 30% of its earnings out as dividends
narrend
the required rate of return on extrudeds shares is 13%. what is the share price today
based on the gordon growth model?
a.$16.00
b.$23.44
c.$24.63
d.$25.88