Finance CSUCI
Dollar, Inc. wants to offer preferred stock for sale at a price of $40 a share. The company wants its investors to earn an 8.25 percent rate of return. What is the minimum annual dividend the firm will need to pay per share?
3.30
You have $800 that you would like to invest. You have 2 choices: Savings account A which earns 8% compounded annually, or savings account B which earns 7.70% compounded monthly. Which would you choose and why?
A because it has a higher effective annual rate.
Which one of the following best exemplifies the concept of a marginal tax?
As the result of opening a new store, Northern Lights owed an additional $1.1 million in taxes.
The financial statement showing a firm's accounting value on a particular date is the
Balance sheet.
Which one of the following statements is correct concerning market and book values?
Book values are affected by the depreciation method used
The process of finding Future Value is called
Compounding
Which one of the following is a capital structure decision
Establishing the preferred debt-equity level
Which of the following statements is/are false, all else the same? I. Present values increase as the discount rate increases. II. Present values increase the further away in time the future value. III. Present values are always smaller than future values when both r and t are positive.
I and II only
Which of the following are advantages of the corporate form of organization? I. ability to raise large sums of capital II. ease of ownership transfer III. corporate taxation IV. unlimited firm life
I, II, and IV only
The cash generated from a firm's normal business activities is referred to as the firm's
Operating Cash Flow
The primary goal of financial management is to maximize the:
The primary goal of financial management is to maximize the:
Kate wants to invest $1,000 for five years. Which one of the following will provide her with the largest future value?
a. 6 percent simple interest b. 6 percent interest, compounded monthly c. 6 percent interest, compounded annually d. 7 percent simple interest EE. 7 percent interest, compounded monthly
The potential conflict of interest between a firm's owners and its managers is referred to as a(n):
agency problem
Free cash flow is equal to:
cash flow from assets.
A loan has an APR of 8.5 percent and an EAR of 8.5 percent. Given this, the loan must:
charge interest annually.
A firm created as a separate and distinct legal entity that may be owned by one or more individuals or entities is called a:
corporation
Net working capital is defined as
current assets minus current liabilities.
The financial statement that summarizes a firm's operations over a period of time is called a(n):
income statement.
Depreciation
is a non-cash expense.
An expense that lowers net income but does not affect a firm's cash flow is referred to as a(n):
noncash item.
Compound interest is defined as the interest earned:
on both the initial principal and all interest earned and reinvested in prior periods.
. A series of unending cash flows of equal amount that occur at equal intervals of time is called a(n):
perpetuity.
The matching principle states that:
the costs of producing an item should be recorded when the sale of that item is recorded as revenue.
The average tax rate is defined as the:
total taxes divided by total taxable income.