FIN 370 Finance For Business
FINAL EXAM (Set 4)
1.
A common-size income statement:
2.
The condominium at the beach that you
want to buy costs $249,500. You plan to make a cash down payment of 20 percent
and finance the balance over 10 years at 6.75 percent. What will be the amount
of your monthly mortgage payment?
3.
Anthony's Appliances pays a constant
quarterly dividend of $.35 per share. How much are you willing to pay for one
share if you require a 9 percent rate of return?
4.
The present value of an annuity will
decrease when either the:
5.
Given an interest rate of zero
percent, the future value of a lump sum invested today will always:
6.
Preferred stock:
7.
The interest rate used to compute the
present value of a future cash flow is called the:
8.
Working capital management includes
which of the following?
9.
The interest rate per period
multiplied by the number of periods in a year is called the:
10. The
annual interest on a bond divided by the bond's market price is called the:
11. Locksmith's
is expected to pay an annual dividend of $.75 this month. The stock is selling
for $10.90 a share and has a required return of 11 percent. What is the growth
rate of the dividend?
12. The
yield to maturity on a bond is:
13. Which
of the following affect the current price of a stock?
14. Dustin
is considering an investment that will pay $3,000 a year for 10 years, starting
15. 1
year from today. How much should Dustin pay for this investment if he wishes to
earn a 9 percent rate of return?
16. The
primary benefit of cumulative voting is:
17. Denton,
Inc. has total equity of $83,000 and total assets of $255,000. What is the
total debt ratio?
18. Karen
has $16,000 that she wants to invest for 1 year. She can invest this amount at
The North Bank and earn 5.50 percent simple interest. Or, she can open an
account at The South Bank and earn 5.39 percent interest, compounded monthly.
If Karen decides to invest at The North Bank, she will:
19. The
financial statements of Classic Collectables reflect cash of $15,800, accounts
receivable of $31,600, accounts payable of $40,100, inventory of $54,700, long-term
debt of $60,000, and net fixed assets of $99,500. The firm estimates that if it
wanted to cease operations today it could sell the inventory for $39,000 and
the fixed assets for $77,000. What is the market value of the assets?
20. Crabtree,
Inc. has an operating cash flow of $164,900, depreciation expense of $93,100,
and taxes paid of $80,400. A partial listing of its balance sheet accounts is
as follows: ……………
21. What
is the amount of Crabtree's cash flow from assets?
22. The
tax rate applicable to the next dollar of taxable income is called the _____
tax rate.
23. Sander's
Supplies has paid a constant dividend of $2.15 a share for the past 20 years.
Yesterday, the firm announced that the dividend will increase next year by 5
percent and will stay at the level for three years, after which time the
dividends will increase by 4 percent annually. The required return on this
stock is 9 percent. What is the current value per share?
24. A
6 percent $1,000 bond matures in 4 years, pays interest semiannually, and has a
yield to maturity of 6.85 percent. What is the current market price of the
bond?
25. Which
one of the following statements is correct?
26. Which
one of the following is a breakdown of the ROE into its three component parts?
27. Dividends
become a liability of a firm on the:
28. If
shareholders are granted a preemptive right they will be:
29. The
voting system whereby a shareholder can cast all of his or her votes for a
single candidate for the board of directors is called _____ voting.
30. Which
one of the following statements is correct?
31. The
8.5 percent annual coupon bonds of Eberly, Inc. are selling for $930.12. The
bonds have a face value of $1,000 and mature in 9 years. What is the yield to
maturity?
32. Which
of the following correctly describe a dealer market?
33. Global
Enterprises has just signed a $3 million contract. The contract calls for a
payment of $.5 million today, $.9 million one year from today, and $1.6 million
two years from today. What is this contract really worth if Global Enterprises
can earn 12 percent on its money?
34. Around
Town Movers recently purchased a new truck costing $97,000. The firm financed
this purchase at 8.25 percent interest with monthly payments of $2,379.45. How
many years will it take the firm to pay off this debt?
35. The
coupon is the:
36. Which
of the following will increase the total amount of interest earned on an
investment? Assume all interest is reinvested.
37. The
coupon rate for a bond is best defined as the:
38. A
debenture is:
39. The
common stock of Bethel Baked Goods is valued at $8.76 a share. The company
increases its dividend by 1.5 percent annually and expects its next dividend to
be $.65 per share. What is the required rate of return on this stock?
40. The
goal of financial management is to increase the:
41. The
7 percent coupon bonds of the Media Printing Co. are selling for 102 percent of
par value. The bonds mature in 6 years and pay interest semiannually. These
bonds have current yield of _____ percent, a yield to maturity of _____
percent, and an effective annual yield of _____ percent.
42. A
$1,000 face value bond quoted as 102.16 sells for _____ and a bond quoted as
99:08 sells for _____.
43. The
dividend yield is defined as:
44. Blake's
offers a perpetuity that pays annual payments of $8,000. This contract sells
for $75,000 today. What is the interest rate?
45. Eli
and Sons wants to evaluate its assets to determine if its mix of assets has
changed over time. To do this, the firm should compile which one of the
following financial statements for each of the past few years?
46. Boots
Roofing just paid its annual dividend of $.90 a share. The firm recently
announced that all future dividends will be increased by 3.5 percent annually.
What is one share of this stock worth to you if you require a 12 percent rate
of return?
47. A
series of equal cash flows that occur at the beginning of each time period for
a limited number of time periods is called a(n):
48. Payments
of $100 a month for 24 months are defined as a(n):
49. A
bond has a $1,000 face value, a market price of $1,115, and pays interest
payments of $90 every year. What is the coupon rate?
50. Trevor's
Tires is offering a set of 4 premium tires on sale for $550. The credit terms
are 24 months at $20 per month. What is the interest rate on this offer?
51. Which
one of the following is a form of bond issue wherein interest payments are made
directly to the owners of record?
52. Over
the past year, a firm increased its current assets and decreased its current
liabilities. As a result, the firm's net working capital:
