Calculate the amount to be received at the end of year 1 that is equivalent to $150 at the
end of year 1, $450 at the end of year 2, and $300 at the end of year 3, given a discount
rate of 10%.
A.$807
B.$817
C.$887
D.$975
E.$1,331
In most companies, the bulk of accounts payable arises from:
A.buying inventory on credit.
B.selling inventory on credit.
C.buying airline tickets for traveling employees on credit.
D.customers paying off old bills.
A $3 million revolving credit agreement charges a commitment fee of .3% on
unborrowed funds. The borrowing company owed nothing at the beginning of April,
and during the month made only one take-down on the fifteenth. The commitment fee
for April was $562.50. How much did the firm borrow on the fifteenth?
A.$3,000,000
B.$1,500,000
C.$2,250,000
D.$2,500,000
The cost of equity from selling new stock is greater than the cost of retained earnings
because:
A.selling new stock decreases the earnings per share.
B.selling new stock increases the market price of the stock.
C.of the flotation costs.
D.dividends are increased.
A reorganization in bankruptcy is a business plan that enables a bankrupt firm to
continue operating. The acceptability of a plan depends upon the following criteria:
A.fairness and timeliness of debt repayment.
B.feasibility and timeliness of debt repayment.
C.feasibility and fairness of debt repayment.
D.the reasonability of the debt restructuring scheme and the timeliness of debt
repayment.
If a firm increases its leverage, which extended Du Pont equation ratio is most directly
affected?
A.ROS
B.ROA
C.Equity multiplier
D.Total asset turnover
What is the real rate of interest on a $50,000 loan if $62,000 repays the loan after one
year, given a rate of inflation of 12%?
A.18%
B.24%
C.12%
D.10%
E.21%
A ____ pools the contributions of many investors and employs a professional manager
to select securities that match a particular set of investment goals.
A.mutual fund
B.stock
C.bond
D.real asset
The sale of a 10-year bond by one investor to another investor would be considered a
transaction that takes place in the:
A.primary capital market.
B.primary money market.
C.secondary capital market.
D.secondary money market.
E.None of the above
Rupp Pumps is purchasing an extruder for $80,000. The extruder will require an
expenditure of $12,000 for installation and $4,000 for training new operators. The new
equipment will require an increase of $5,000 in inventory, $4,000 in accounts
receivable, and $3,000 in accounts payable. What is the net investment for this project?
A.$108,000
B.$102,000
C.$98,000
D.$99,000
Rank the various types of mergers from high to low with respect to their potential to
raise antitrust issues.
A.Conglomerate, Horizontal, Vertical
B.Horizontal, Vertical, Conglomerate
C.Vertical, Horizontal, Conglomerate
D.Horizontal, Conglomerate, Vertical
E.Vertical, Conglomerate, Horizontal