The Three Amigos Restaurant just paid an annual dividend of $4.20 per share and is
expected to pay annual dividends of $4.40 and $4.50 per share the next two years,
respectively. After that, the firm expects to maintain a constant dividend growth rate of
2 percent per year. What is the value of this stock today if the required return is 15
percent?
A. $27.64
B. $29.61
C. $30.66
D. $33.05
E. $33.93
The accounts receivable period is the time that elapses between the _____ and the ____.
A. purchase of inventory; payment to the supplier
B. purchase of inventory; collection of the receivable
C. sale of inventory; payment to supplier
D. sale of inventory; collection of the receivable
E. sale of inventory: billing to customer
BJB, Inc. stock has an expected return of 15.15 percent. The risk-free rate is 3.8 percent
and the market risk premium is 8.6 percent. What is the stocks beta?
A. 1.19
B. 1.21
C. 1.32
D. 1.48
E. 1.62
In New York, you can exchange $1 for 0.7538 or 0.6789. In Berlin, 1 costs
1.1087. How much profit can you earn on $1,000 using triangle arbitrage?
A. $1.09
B. $1.17
C. $1.47
D. $1.58
E. $1.70
The profitability index reflects the value created per dollar:
A. invested.
B. of sales.
C. of net income.
D. of taxable income.
E. of shareholders equity.
Tally Ho Inn has annual sales of $737,000. Earnings before interest and taxes is equal to
21 percent of sales. For the period, the firm paid $7,900 in interest. What is the profit
margin if the tax rate is 35 percent?
A. 12.46 percent
B. 12.95 percent
C. 13.33 percent
D. 15.29 percent
E. 16.11 percent
The relationship between the present value and the time period is best described as:
A. direct.
B. inverse.
C. unrelated.
D. ambiguous.
E. parallel.
Which one of the following will increase the present value of a lump sum future
amount? Assume the interest rate is a positive value and all interest is reinvested.
A. Increase in the time period
B. Increase in the interest rate
C. Decrease in the future value
D. Decrease in the interest rate
E. None of these
Franks Oil Supply has a cash balance of $27 and a short-term loan balance of $50 at the
beginning of quarter 1. The net cash inflow for the first quarter is $68 and for the
second quarter there is a net cash outflow of $23. All cash shortfalls are funded with
short-term debt. The firm pays 2 percent of its prior quarters ending loan balance as
interest each quarter. The minimum cash balance is $15. What is the short-term loan
balance at the end of the first quarter?
A. $0
B. $13
C. $15
D. $17
E. $18
Larrys Gun Shop has sales of $189,000, a profit margin of 5.6 percent, and a capital
intensity ratio of 0.79. What is the return on assets?
A. 4.42 percent
B. 6.08 percent
C. 6.39 percent
D. 6.92 percent
E. 7.09 percent
Turners Store had a profit margin of 6.8 percent, sales of $898,200, and total assets of
$798,000. If management set a goal of increasing the total asset turnover to 1.40 times,
what would the new sales figure need to be, assuming no increase in total assets?
A. $860,333
B. $984,320
C. $1,088,500
D. $1,117,200
E. $1,257,480
Taylor, Inc. has sales of $11,898, total assets of $9,315, and a debt-equity ratio of 0.55.
If its return on equity is 14 percent, what is its net income?
A. $841.35
B. $887.16
C. $904.10
D. $911.16
E. $927.46