On which one of the following dates is the principal amount of a bond repaid?
A. Coupon date
B. Issue date
C. Discount date
D. Maturity date
E. Face date
Delivery trucks are classified as:
A. noncash expenses.
B. current liabilities.
C. current assets.
D. tangible fixed assets.
E. intangible fixed assets.
An increase in which one of the following will increase operating cash flow for a
profitable, tax-paying firm?
A. Fixed expenses
B. Interest paid
C. Net capital spending
D. Inventory
E. Depreciation
Doris Boutique has 4,000 shares of stock outstanding at a price per share of $15. What
will the price per share be if the firm pays a $1.30 per share dividend? Ignore taxes and
market imperfections.
A. $13.70
B. $15.40
C. $15.80
D. $16.00
E. $18.20
Which one of the following refers to a customers willingness to meet his or her credit
obligations?
A. Capital
B. Conditions
C. Capacity
D. Character
E. Collateral
Today, you are borrowing money from your local bank. The loan is to be repaid in one
lump sum payment of $15,000 one year from now. How much money are you
borrowing today if the APR is 10.6 percent?
A. $11,899.48
B. $12,550.00
C. $13,562.39
D. $13,762.14
E. $14,037.97
A firm has a cost of equity of 13 percent, a cost of preferred of 11 percent, and an
aftertax cost of debt of 6 percent. Given this, which one of the following will increase
the firms weighted average cost of capital?
A. Increasing the firms tax rate
B. Issuing new bonds at par
C. Redeeming shares of common stock
D. Increasing the firms beta
E. Increasing the debt-equity ratio
Which one of the following statements is the core principle of M&M Proposition I,
without taxes?
A. A firms cost of equity is directly related to the firms debt-equity ratio.
B. A firms WACC is directly related to the firms debt-equity ratio.
C. The interest tax shield increases the value of a firm.
D. The capital structure of a firm is totally irrelevant.
E. Levered firms have greater value than unlevered firms.
Stevensons Bakery is an all-equity firm that has projected perpetual earnings before
interest and taxes of $138,000 a year. The cost of equity is 13.7 percent and the tax rate
is 32 percent. The firm can borrow money at 6.75 percent. Currently, the firm is
considering converting to a debt-equity ratio of 0.45. What is the firms levered value?
A. $527,613
B. $689,919
C. $752,987
D. $829,507
E. $903,682
A stock has paid dividends of $1.80, $1.85, $2.00, $2.20, and $2.25 over the past five
years, respectively. What is the average capital gains yield?
A. 2.80 percent
B. 3.24 percent
C. 4.45 percent
D. 5.34 percent
E. 5.79 percent
The financial statements of Backwater Marina reflect depreciation expenses of $41,600
and interest expenses of $27,900 for the year. The current assets increased by $31,800
and the net fixed assets increased by $28,600. What is the amount of the net capital
spending for the year?
A. $7,000
B. $21,600
C. $28,600
D. $60,400
E. $70,200
Which one of the following statements concerning the balance sheet is correct?
A. Total assets equal total liabilities minus total equity.
B. Net working capital is equal total assets minus total liabilities.
C. Assets are listed in descending order of liquidity.
D. Current assets are equal to total assets minus net working capital.
E. Shareholders equity is equal to net working capital minus net fixed assets plus
long-term debt.
A stock has an expected return of 15.0 percent, the risk-free rate is 3.2 percent, and the
market risk premium is 8.1 percent. What must the beta of this stock be?
A. 0.88
B. 0.94
C. 1.08
D. 1.31
E. 1.46
A firm has net income of $6,850 and interest expense of $2,130. The tax rate is 34
percent. What is the firms times interest earned ratio?
A. 3.22
B. 5.19
C. 5.38
D. 5.87
E. 6.33
Blue Water Cafe has $28,700 in total assets, depreciation of $3,100, and interest of
$1,400. The total asset turnover rate is 1.2. Earnings before interest and taxes are equal
to 28 percent of sales. What is the cash coverage ratio?
A. 6.33
B. 7.51
C. 9.10
D. 10.23
E. 10.98