University of Phoenix FIN 370 Final Exam 2014
1) The true homeowners of the company are the:A. board of administrators of the agency. B. most popular stockholders.C. frequent stockholders.D. holders of debt problems with the agency.2) Which of the next classes of homeowners have restricted legal responsibility?A. Normal partnersB. Sole proprietorsC. Shareholders of a corporationD. Each a and b3) Which of the next greatest describes the objective of the agency?A. The maximization of the whole market worth of the firm’s frequent stockB. Revenue maximization C. Danger minimization D. Not one of the above4) Which of the next would enhance the necessity for exterior fairness?A. A discount in company profitsB. A slow-down in financial growthC. A seasonal discount in gross sales revenuesD. Insufficient funding opportunities5) Which of the next does NOT contain underwriting by an funding banker?A. Syndicated purchasesB. Negotiated purchasesC. Fee foundation purchasesD. Aggressive bid purchases6) is a technique of providing securities to a restricted variety of buyers.B. Non-public placementC. Syndicated underwritingD. Preliminary public offering7) Problem find worthwhile initiatives is because of:A. moral dilemmas.B. aggressive markets. C. alternative prices.D. social accountability.eight) In keeping with the company downside, symbolize the principals of an organization.A. staff B. managers C. suppliersD. shareholders9) Which of the next is NOT a precept of primary monetary administration?A. Revenue is kingB. Environment friendly capital marketsC. Incremental money circulate countsD. Danger/return tradeoff10) One other identify for the acid take a look at ratio is the:A. common assortment interval. B. stock turnover ratio.C. fast ratio.D. present ratio.11) Marshall Networks, Inc. has a complete asset turnover of two.5% and a web revenue margin of three.5%.The agency has a return on fairness of 17.5%. Calculate Marshall’s debt ratio.B. 50%C. 40% D. 30%12) The accounting fee of return on stockholders’ investments is measured by:A. realized fee of inflation.B. working revenue return on funding. C. return on fairness.D. return on property.13) Northwest Financial institution pays a quoted annual (nominal) rate of interest of four.75%. Nevertheless, it pays curiosity (compounded) each day utilizing a 365-day yr. What's the efficient annual fee of return (APY)?A. four.86%B. three.61% C. 5.02% D. four.75%14) You've got $10,000 to speculate. You do not need to take any danger, so you'll put the funds in a financial savings account on the native financial institution. Of the next decisions, which one will produce the most important sum on the finish of 22 years?A. An account that compounds curiosity monthlyB. An account that compounds curiosity quarterlyC. An account that compounds curiosity dailyD. An account that compounds curiosity yearly 15) When George Washington was president of the US in 1797, his wage was$25,000. In case you assume an annual fee of inflation of two.5%, how a lot would his wage have been in 1997?A. $four,085,920B. $three,489,097C. $2,525,548D. $1,zero25,000E. $954,71916) Which of the next is NOT a primary perform of a finances?A. Budgets permit for efficiency analysis.B. Budgets evaluate historic prices of the agency with its present price efficiency.C. Budgets present the idea for corrective motion when precise figures differ from the budgeted figures.D. Budgets point out the necessity for future financing.17) The first objective of a money finances is to:A. decide the estimated revenue tax for the yr. B. present an in depth plan of future money flows.C. decide accounts payable.D. decide the extent of funding in present and glued property.18) The entire following are discovered within the money finances EXCEPT:A. new financing wanted. B. money disbursements.C. stock.D. a web change in money for the interval.19) Which of the next is a non-cash expense? A. Administrative salariesA. Administrative salariesC. Curiosity expenseD. Depreciation bills20) The break-even mannequin permits the supervisor of a agency to:A. decide the optimum quantity of debt financing to make use of.B. calculate the minimal worth of frequent inventory for sure conditions.C. decide the amount of output that should be offered to cowl all working prices. D. set acceptable equilibrium thresholds.21) A plant can stay working when gross sales are depressed:A. except variable prices are zero when manufacturing is zero.B. if the promoting worth per unit exceeds the variable price per unit. C. in an effort to cowl at the very least a number of the variable price.D. to assist the native financial system.22) When you have $20,000 in an account incomes eight% yearly, what fixed quantity may you withdraw annually and don't have anything remaining on the finish of 5 years?A. $2,465.78B. $three,525.62C. $three,408.88D. $5,008.7623) At what fee should $400 be compounded yearly for it to develop to $716.40 in 10 years?A. eight% B. 6percentC. 7% D. 5%24) The current worth of a single future sum:A. will increase because the low cost fee will increase.B. will increase because the variety of low cost intervals enhance. C. relies upon upon the variety of low cost intervals.D. is mostly bigger than the long run sum.25) Which of the next is taken into account to be a spontaneous supply of financing?A. Accounts payableB. Working leasesC. InventoryD. Accounts receivable26) A toy producer following the hedging precept will typically finance seasonal stock build-up previous to the Christmas season with:A. most popular inventory. B. frequent inventory.C. commerce credit score.D. promoting gear.27) Which of the next is NOT thought of a everlasting supply of financing?A. Business paperB. Company bonds C. Most popular inventory D. Frequent inventory28) For the NPV standards, a challenge is suitable if the NPV is , whereas for the profitability index, a challenge is suitable if the profitability index is .A. better than zero, lower than oneB. lower than zero, better than the required returnC. better than one, better than zeroD. better than zero, better than one29) We compute the profitability index of a capital-budgeting proposal by:A. multiplying the money influx by the IRR.B. dividing the current worth of the annual after-tax money flows by the price of capital. C. multiplying the IRR by the price of capital.D. dividing the current worth of the annual after-tax money flows by the price of the challenge.30) Dieyard Battery Recyclers is contemplating a challenge with the next money flows: Preliminary outlay = $13,000Money flows:Yr 1 = $5,000Yr 1 = $three,000Yr three = $9,000If the suitable low cost fee is 15%, compute the NPV of this challenge.A. $eight,891B. -$466C. $four,000D. $27,53431) Which of the next statements concerning the MIRR is fake?A. A project’s MIRR might be decrease than a project’s IRR.B. If a project’s MIRR exceeds the firm’s low cost fee, the challenge is suitable.C. The MIRR has the identical reinvestment assumption because the IRR. D. The MIRR has the identical reinvestment assumption because the NPV.32) Many corporations as we speak proceed to make use of the payback technique however make use of the NPV or IRR strategies as secondary resolution strategies of management for danger.A. TrueB. False33) You've got been requested to research a capital funding proposal. The project’s price is$2,775,000. Money inflows are projected to be $925,000 in Yr 1; $1,000,000 in Yr 2; $1,000,000 in Yr three; $1,000,000 in Yr four; and $1,225,000 in Yr 5. Assume that your firmdiscounts capital initiatives at 15.5%. What's the project’s MIRR?A. 19.99%B. 10.44% C. 12.62% D. 16.73%34) The NPV assumes money flows are reinvested on the:A. price of capital.B. NPV. C. IRR.D. actual fee of return.35) ABC Service should buy a brand new assembler for $15,zero52 that may present an annual web money circulate of $6,000 per yr for 5 years. Calculate the NPV of the assembler if the required fee of return is 12%. (Spherical your reply to the closest $1.)A. $6,577B. $four,568C. $1,056D. $7,62136) The agency ought to settle for impartial initiatives if:A. the NPV is larger than the discounted payback. B. the profitability index is larger than 1.zero.C. the payback is lower than the IRR. D. the IRR is constructive. 37) The common price related to every extra greenback of financing for funding initiatives is:A. beta.B. the marginal price of capital. C. the incremental return.D. risk-free fee.38) Price of capital is:A. the common price of the firm’s property.B. a hurdle fee set by the board of administrators. C. the coupon fee of debt.D. the speed of return that should be earned on extra funding if agency worth is to stay unchanged.39) PepsiCo makes use of 30-year Treasury bonds to measure the risk-free fee as a result of:A. these bonds are primarily freed from enterprise danger.B. they seize the long-term inflation expectations of buyers related to investments in long-term property.C. these bonds are primarily freed from rate of interest danger. D. not one of the above.40) J & B, Inc. has $5 million of debt excellent with a coupon fee of 12%. Presently, theyield to maturity on these bonds is 14%. If the firm’s tax fee is 40%, what's the price of debt to J& B?A. 5.6% B. 14.zero% C. 12.0percentD. eight.four%41) Shawhan Provide plans to keep up its optimum capital construction of 30% debt, 20% most popular inventory, and 50% frequent inventory far into the long run. The required return on every element is: debt–10%; most popular stock–11%; and customary stock–18%. Assuming a 40% marginal tax fee, what after-tax fee of return should Shawhan Provide earn on its investments if the worth of the agency is to stay unchanged?A. 14.2% B. 13.0percentC. 18.zero% D. 10.zero%42) The anticipated dividend is $2.50 for a share of inventory priced at $25. What's the price of retained earnings if the long-term progress in dividends is projected to be eight%?A. 18%B. eight% C. 10% D. 25%43) Lever Brothers has a debt ratio (debt to property) of 40%. Administration is questioning if its present capital construction is simply too conservative. Lever Brothers’s current EBIT is $three million, and income obtainable to frequent shareholders are $1,560,000, with 342,857 shares of frequent inventory excellent. If the agency have been to as an alternative have a debt ratio of 60%, extra curiosity expense would trigger income obtainable to stockholders to say no to $1,440,000, however solely 228,571 frequent shares could be excellent. What's the distinction in EPS at a debt ratio of 60% versus 40%?A. $four.50B. $2.00C. $1.75D. $three.25 44) Zybeck Corp. initiatives working revenue of $four million subsequent yr. The firm’s revenue tax rateis 40%. Zybeck presently has 750,000 shares of frequent inventory which have a market worth of $10 per share, no most popular inventory, and no debt. The agency is contemplating two options to finance a brand new product: (a) the issuance of $6 million of 10% bonds, or (b) the issuance of 60,000 new shares of frequent inventory. If Zybeck points frequent inventory this yr, what's going to projected EPS be subsequent yr?A. $1.67B. $2.96C. $2.10D. $2.3345) Lever Brothers has a debt ratio (debt to property) of 20%. Administration is questioning if its present capital construction is simply too conservative. Lever Brothers’s current EBIT is $three million, and income obtainable to frequent shareholders are $1,680,000, with 457,143 shares of frequent inventory excellent. If the agency have been to as an alternative have a debt ratio of 40%, extra curiosity expense would trigger income obtainable to stockholders to say no to $1,560,000, however solely 342,857 frequent shares could be excellent. What's the distinction in EPS at a debt ratio of 40% versus 20%?A. $zero.88B. $1.16C. $2.12D. $1.9546) Which of the next statements about trade charges is true?A. Alternate charges have been fastened previous to establishing a floating-rate worldwide forex system, and all nations set a selected parity fee for his or her forex relative both to the Canadian or to the U.S. greenback.B. Day-to-day fluctuations in trade charges presently are brought on by modifications in parity charges.C. A floating-rate worldwide forex system has been working since 1973. D. The entire decisions. 47) A bond offered concurrently in a number of completely different international capital markets, however denominated in a forex completely different from the nation during which the bond is issued, known as a(n):A. Eurobond.B. floating bond. C. world bond.D. worldwide capital bond.48) Capital markets in international nations:A. supply decrease returns than these obtainable within the home capital markets. B. present worldwide diversification.C. typically have gotten much less built-in because of the widespread availability of rate of interest and forex swaps.D. all the decisions.49) If the quote for a ahead trade contract is larger than the computed worth, the ahead contract is:A. at equilibrium. B. a very good purchase.C. overvalued.D. undervalued.50) The interaction between rate of interest differentials and trade charges such that each alter till the international trade market and the cash market attain equilibrium known as the:A. arbitrage markets principle. B. rate of interest parity principle.C. buying energy parity principle.D. stability of funds quantum principle. 51) A spot transaction happens when one forex is:A. traded for one more at an agreed-upon future worth.B. exchanged for one more forex at a specified worth. C. deposited in a international financial institution.D. instantly exchanged for one more forex.52) Shopping for and promoting in a couple of market to make a riskless revenue known as:A. can't be decided from the above data. B. worldwide buying and selling.C. revenue maximization. D. arbitrage.53) One motive for worldwide funding is to cut back:A. beta danger.B. benefits out of the country. C. portfolio danger.D. price-earnings (P/E) ratios.54) An essential (extra) consideration for a direct international funding is:A. political danger.B. maximizing the firm’s income.C. attaining a excessive worldwide P/E ratio. D. all the above.