FINA Final

You dream of endowing a chair in finance at the local university that will provide a salary of $250,000 per year forever, with the first cash flow to be one year from today. If the university promises to invest the money at a rate of 4% per year, how much money must you give the university today to make the dream a reality? $3,000,000 $8,857,143 This question cannot be answered $6,250,000

$6,250,000

Cash and Equivalents are $1,561: Short-Term Investments are $1,250 accounts receivables are $3,157; Accounts Payable are $5,121; Short-Term Debt is $3,728; Inventories are $4,349; Other Current Liabilities are $1,401; and Other Current Assets are $707. What is the amount of Total Current Liabilities. $11,024 $1037 $10,250 $8,286

$10,250

Jack and Jill are saving for a rainy day and decide to put $40 away in their local bank every year for the next 30 years. The local Up-the-Hill Bank will pay them 4.5% on their account. If Jack and Jill put the money in the account faithfully at the end of every year, how much will they have in it at the end of the 30 years? $149.81 $2,590.10 $2,440.28 $651.56

$2,440.28

Cash inflow: Y1: $16,000 Y2: $22,000 Y3: $32,000 Y4: $0 Y5: $0 Y6: $0 Y7: $130,000 $226,813.30 $256,068.89 $159,466.83 $141,247.92

$226,813.30

You turn 25 years old today and are planning save for retirement. You want to retire at the age of 65 and have $2,000,000 in your savings account at that time. The bank is now offering a certificate of deposit with an interest rate of 5%. how much do you have to put into your savings account today in order to reach your goal retirement assuming that it is the only deposit that you're going to make?

Between $284,089 & $284,095

18 Years ago your grandparents put aside $15,000 to create a college fund for you. The fund has grown at 5% annual rate. How much do you have in that fund today assuming that no other deposits or withdraws have been made.

Between 36,095 & 36,103

Which of the following is NOT an example of annuity cash flows? The grocery bill that changes every week Regular equal monthly rent payments you pay at the beginning of the month Equal annual deposits into a retirement account The $3.50 you pay every morning for a bagel and coffee as you run your first morning class

The grocery bill that changes every week

What is the net working capital for the year ending 2017? Account: 12/31/2017 Accumulated Depreciation: 2673 Accounts Payable: 2052 Accounts Receivable: 2681 Cash: 1199 Common Stock: 4996 Inventory: 6039 Long-term Debt: 8194 Plant, property, and equipment: 9207 Retained Earnings: 1211

$7,867

A wealthy man just died and left his pet dogs the following estate: $50,000 per year for the next 15 years with the first cash flow today. At a discount rate of 3.2% what is the doggy estate worth in todays dollars? $588,352.84 $774,000 $607,180.14 $750,000.00

$774,000

Cash and Equivalents are $1,206, short-term investments are $1,000 accounts receivables are $3,157, accounts payable $5,121 short-term debt is $1,288, investors are $2,349, Other current liabilities are $1,401, and other current assets are $707. What are Total Current Assets? $7,810 $8,700 $8,419 $7,712

$8,419

Net Working Capital for 2016 is $2,457 and Net Working Capital for 2017 is $2,198. What is the change in Net Working Capital ($1,707) $1707 ($259) $259

($259)

What is the operating cash flow for the year for Harper brothers INC. if it had sales revenue of $311,400,000, Cost of Goods Sold of $138,200,000. Sales and administrative costs of $40,300,000, depreciation expense of $63,700,000 and a tax rate of 40% 27,680,000 69,200,000 41,520,000 105,220,000

105,220,000

Jamal is waiting to be a millionaire. He wants to know how long he must wait if he invests $172,694.16 at 11% annually today? 38 21 17 24

17

Marie has $1,200,000 investment portfolio and she wishes to spend $87,500 per year as an ordinary annuity. If the investment account earns 5% annually, how long will her portfolio last? 19.86 years 11.43 years 23.72 years 14.17 years

23.72 years

Let's say that you have just won the state lottery. Your financial advisor suggests that your invest your $26,000,000 lottery price into a 25-year annuity which allows you to withdraw a $1,750,000 at the end of each year for the next 25 years. What is your rate of return you take this offer? 5.3020% 4.4811% 3.9804% 4.7225%

4.4811%

Dividend growth rate is important to many investors. You are considering investing in a firm after looking at the firm's dividends over a six-year period. At the end of the year 2010, the firm paid a dividend of $0.98. At yearend 2016, it paid a dividend of $1.64. What's the average annual growth rate of dividends for this firm? 9.86% 8.97% There is not enough info 8.25%

8.97%

Which of the following is NOT a DISADVANTAGE of a partnerships? Agreements between partners may be easily formed The potential difficulty in transferring ownership Unlimited liability to at least some of the owners The limited life of the business

Agreements between partners may be easily formed

__________ is simply the interest earned in subsequent periods on the interest earned in prior periods Compound Interest Anticipated Interest Simple Interest Quoted Interest

Compound Interest

A ______ has limited liability, is a legal entity, and has the greatest potential to raise capital Sole proprietorship Limited partnership General Partnership Corporation

Corporation

When you pay off the principal and all of the interest at one time at the maturity date of the loan, we call this type of loan a/an Discount Loan Interest-only Loan compound Loan Amortized Loan

Discount Loan

Which of the following is NOT an example of equity market transaction? Mark sells his shares of Apple stock. Grant contacts his broker and requests a purchase of IBM bonds. Pavlina buys shares of small company stock traded on the NASDAQ Apple repurchases shares from its shareholders.

Grant contacts his broker and requests a purchase of IBM bonds.

Consider the TVM equation: A decrease in the time period will increase the future value, other things remaining equal. (T/F)

False

Present Values and interest rates are inversely related. This means that if you deposit $1,000 into an interest-earing account today. it will take longer to reach a future value of $5,000 at an interest rate of 6% than a rate of 4% (T/F)

False

The financial management function is generally defined as the movement money from lender to borrower and back again. (T/F)

False

When there are conflicts among managerial goals in U.S. markets, the most important priority is to Increase the current market value of equity Foster good relationships with the community Maintain a safe and happy work place Keep all of the company's customers happy

Increase the current market value of equity

Which of the following actions will DECREASE the present value of an investment all else equal? Decrease the interest rate. Decrease the interest rate and increase the future value. Increase the interest rate Increase the future value

Increase the interest rate

You are presented with two cash flow options: option near, a $5,000 annuity for three years, with the first cash flow one year from today, or Option Far, a $5,000 annuity for six years with the first cash flow ten years today. Assuming an interest rate of 7.0% which set of has flows has a greater present value? Option Far has a greater PV of $13,121.58 vs Option Near PV of $12,963.41 Option Far has a greater PV of $30,000 vs Option Near PV of $15,000 Option Near and Option Far have the same PV of $12,963.41

Option Far has a greater PV of $13,121.58 vs Option Near PV of $12,963.41

Free cash flow is the Remaining cash free to distribute to creditors and owners of the firm, cash that a company generates to operate the company , and cash flow from assets. remaining cash free to distribute to creditors and owners of the firm Cash that a company generates to operate the company Cash flow from assets

Remaining cash free to distribute to creditors and owners of the firm, cash that a company generates to operate the company , and cash flow from assets.

Which of the following is NOT a function of a financial intermediary in the lending/borrowing process? To bear the risk that the lender will not repay To help establish terms of the lending/borrowing agreement To match the borrower and the lender To bear the risk that the borrower will not repay

To bear the risk that the lender will not repay

Corporate finance is the area of finance concerned with activities such as repayment of borrowed funds through dividends or interest payments (T/F)

True

Given positive equal annual cash flows and a positive interest rate, the future value of an annuity will be greater than the sum of the cash flows (T/F)

True

Susan and her spouse have saved $5,500 for a 12 day cruise vacation in Europe. The couple needs $6,500 for a "nice" cabin or $7,000 for a "luxury" cabin. If cabin prices are expected to remain constant for the next five years and susan expects to earn 5% per year on her investments, will the couples savings be enough to afford the "nice" cabin in five years? Can they afford the luxury cabin? Why or Why note? Yes they can afford the "nice" cabin or the luxury cabin because their $5,500 investment will increase to $7,020 by the end of year five. Yes they can afford the "nice" cabin but NOT the luxury cabin because their $5,500 investment will only increase to $6,875 by the end of year five. no they cannot afford the "nice" cabin or the luxury cabin because their $5,500 investment will only increase to $6,367 by the end of year five. Yes they can afford the "nice" cabin but NOT the luxury cabin because their $5,500 investment will increase to $6,367 by the end of year five.

Yes they can afford the "nice" cabin or the luxury cabin because their $5,500 investment will increase to $7,020 by the end of year five.

Which of the following explain why net income is not the same as cash flow Accrual accounting accrual accounting, non-cash expense items such as depreciation, and preference to classify interest expense as part of financial cash flow Non-cash expense items such as depreciation Preference to classify interest expense as part of financial cash flow

accrual accounting, non-cash expense items such as depreciation, and preference to classify interest expense as part of financial cash flow

A series of equal periodic finite cash flows that occur at the beginning of the period are known as a/an Perpetunity annuity due ordinary annuity amortization

annuity due

The purpose of studying financial statements is to primarily investigate all portions of the statements that have relevance for dividend policy to mechanically build portfolio analysis to understand those portions of the statements that have relevant for financial decision making to mechanically learn how to read and understand footnotes

to understand those portions of the statements that have relevant for financial decision making