Finance Final

You are planning a trip to Australia. Your hotel will cost you A$135 per night for six nights. You expect to spend another A$2400 for meals, tours, souvennirs, and so forth. How much will this trip cost you in U.S. dollars if $1=A$1.2904 A) $2,488 B) $3,498 C) $2,631 D) $4,452 E) $4,142

A. $2,488

A five-year project has an initial fixed asset investment of $613,600, an initial net working capital investment of $22,200, and an annual operating cash flow of -$76,540. The fixed asset is fully depreciated over the life of the project and has no salvage value. The net working capital will be recovered when the project ends. The required return is 11.7 percent. What is the project's equivalent annual cost, or EAC A) -$248,092.76 B) -$182,309.18 C) -$147,884.01 D) -$235,490.58 E) -$242,212.22

A. -$248,092.76

Nu Tek has sales of $19,700, net income of $3,517, fixed assets of $18,282, current liabilities of $2,940, current assets of $3,018, long term debt of $7,600, and equity of $10,760. Assets, costs, and current liabilities are proportional to sales. Long term debt and equity are not. The company maintains a constant 50 percent dividend payout ratio. Next years sales are projected to increase by 7 percent. What is the amount of external financing needed if the firm is currently operating at full capacity A) -$596 B) -$141 C) $583 D) $912 E) -$482

A. -$596

JK Motors has sales of $96,400, costs of $53,800, interest paid of $2,800 and a depreciation of $7,100. The tax rate is 21 percent. What is the value of the cash coverage ratio? A) 15.21 B) 12.14 C) 17.27 D) 23.41 E)12.68

A. 15.21

A firm has 160,000 shares of stock outstanding, sales of $1.94 million, net income of $126,400, a price-earnings ratio of 21.3, and a book value per share of $7.92. What is the market-to-book ratio? A) 2.12 B) 1.84 C) 1.39 D) 2.45 E) 2.69

A. 2.12

In 2017, Boyer Enterprises had $76,700 in taxable income. What was the firm's average tax rate of the year A) 28.25 percent B) 18.68 percent C) 26.48 percent D) 20.14 percent E) 29.03 percent

A. 28.25 percent

TJ's has annual sales of $813,200, total debt of $176,000, total equity of $396,000, and a profit margin of 5.78 percent. What is the return on assets? A) 8.29 percent B) 6.48 percent C) 9.94 percent D) 7.78 percent E) 8.02 percent

A. 8.29 percent

Last year, Kaylor Equipment had $15900 of sales, $500 of net new equity, dividend payments of $75, an addition to retained earnings of $418, depreciation of $680 and $511 of interest expense. What are the earnings before interest and taxes at a tax rate of 21 percent? A) $589.46 B) $1,135.05 C) $1,331.54 D) $1,560.85 E) $949.46

B. $1,135.05

Three Corners Markets paid an annual dividend of $1.42 a share last month. Today, the company annouced the future dividends will be increasing by 1.3 percent annually. If you require a return of 14.6 percent, how much are you willing to pay to purchase one share of this stock today? A) $11.23 B) $10.82 C) $10.68 D) $9.68 E) $11.57

B. $10.82

Andre's Bakery has sales of $487,000 with costs of $263,000. Interest expense is $26,000 and depreciation is $42,000. The tax rate is 21 percent. What is the net income? A) $142,750 B) $123,240 C) $109,000 D) $128,700 E) $143,500

B. $123,240

HiWay Furniture has sales of $316,000, depreciation of $47,200. Interest expense of $41,400, costs of $148,200 and taxes of $16,632. The firm has net capital spending of $36,400 and a decrease in net working capital of $14,300. What is the cash flow from assets for the year? A) $145,985 B) $129,068 C) $119,655 D) $120,810 E) $134,585

B. $129,068

SS Stores has a total debt of $4,910 and a debt equity ratio of 0.52. What is the value of total assets? A) $16,128.05 B) $7,253.40 C) $9,571.40 D) $11,034.00 E) $14,352.31

E. $14,352.31

Your car dealer is willing to leave you a new car for $190 a month for 36 months. Payments are due on the first of each month starting with the day you sign the lease contract. If your cost of money is 6.5 percent, what is the current value of the lease A) $10,331.03 B) $6,232.80 C) $9,197.74 D)$7,203.14 E) $11,008.31

B. $6,232.80

A firm has $680 in inventory, $2,140 in fixed assets, $210 in accounts receivables, $250 in accounts payable, and $80 in cash. What is the amount of the net working capital? A) $970 B) $720 C) $640 D) $3,110 E) $2,860

B. $720

Oil Wells offers 5.65 percent coupon bonds with semiannual payments and a yield to maturity of 6.94 percent. The bonds mature in seven years. What is the market price per bond if the face value is $1000 A) $949.70 B) $929.42 C) $936.48 D)$902.60 E) $913.48

B. $929.42

The risk-free rate return is 2.7 percent, the inflation rate is 3.1 percent, and the market risk premium is 6.9 percent. What is the expected rate of return on a stock with a beta of 1.08? A) 10.92 percent B) 10.15 percent C) 12.22 percent D) 11.47 percent E) 11.79 percent

B. 10.15

Mullineaux Corporation has a target capital structure of 46 percent common stock, 5 percent preferred stock, and the balance in debt. Its cost of equity is 15.8 percent, the cost of preferred stock is 8.3 percent, and the aftertax cost of debt is 6.8 percent. What is the WACC given a tax rate of 23 percent. A) 9.89 percent B) 10.43 percent C) 11.02 percent D) 11.38 percent E) 12.17 percent

B. 10.43 percent

A firm has common stock of $6,200, paid-in surplus of $9,100, total liabilities of $8,400, current assets of $5,900, and fixed assets of $21,200. What is the amount of the shareholders' equity? A) $6,900 B) $15,300 C) $18,700 D) $23,700 E) $35,500

C. $18,700

A project has an initial cash outflow of $42600 and produces cash inflows of $17680, $19920, and $15670 for years 1 through 3 respectively. What is the NPV at a discount rate of 12 percent? A) $186.95 B) -$108.19 C) $219.41 D) $229.09 E) $311.16

C. $219.41

During the year, RIT Corp. had sales of $565,600. Costs of goods sold, administrative and selling expenses, and depreciation expenses were $476,000, $58,800, and $42,800, respectively. In addition, the company had an interest expense of $112,000 and a tax rate of 32 percent. What is the operating cash flow for the year? Ignore any tax loss carryback or carry-forward provisions. A) $17,920 B) $21,840 C) $30,800 D) $52,600 E) $77,840

C. $30,800

The Up-Towner has sales of $913,400, costs of goods sold of $579,300, inventory of $123,900, and accounts receivable of $78,900. How many days on average does it take the firm to sell its inventory assuming that all sales are on credit? A) 74.19 B) 84.69 C) 78.07 D) 96.46 E) 71.01

C. 78.07 days

The Lakeside Inn had operating cash flow of $48,450. Depreciation was $6,700 and interest paid was $2,480. A net total of $2,620 was paid on long-term debt. The firm spent $24,000 on fixed assets and decreased net working capital by $1,330. What is the amount of the cash flow to stockholders? A) $5,100 B) $7,830 C) $18,020 D) $19,998 E) $20,680

E. $20,680

a proposed projecct has an initial cost of $38000 and cash inflows of $12300, $24200, and $16100 for years 1 through 3, respectively. The required rate of return is 16.8 percent. Based on IRR, should this project be accepted. Why or why not? A) No; The IRR exceeds the required return B) NO; The IRR is less than the required return C) Yes; The IRR exceeds the required return D) Yes; The IRR equals the required return E) No; the IRR equals the required return

C. Yes; The IRR exceeds the required return

Grill Works has 6 percent preferred stock outstanding that is currently selling for $49 a share. The market rate of return is 14 percent and the tax rate is 21 percent. What is the cost of preferred stock if its stated value is $100 per share. A) 12.77 percent B) 12.29 percent C) 12.67 percent D) 12.24 percent E) 12.56 percent

D. 12.24 percent

The outstanding bonds of Tech Express are priced at $1023 and mature in 13 years. These bonds have a face value of $1000, a coupon rate of 6.5 percent, and pay interest semiannually. The tax rate is 21 percent. What is the aftertax cost of debt A) 4.28 percent B) 4.22 percent C) 4.35 percent D) 4.93 percent

D. 4.93 percent

You just obtained a loan of $16700 with monthly payments for four years at 6.35 percent interest, compound monthly. What is the amount of each payment A) $387.71 B) $391.40 C) $401.12 D) $419.76 E) $394.89

E. $394.89

Today, you want to sell $1000 face value zero coupon bond your currently own. The bond matures in 3.5 years. How much will you receive for your bond if the market yield to maturity is currently 6.19 percent? Ignore any accrued interest. Assume semiannual compounding A) $896.60 B) $798.09 C) $741.08 D) $756.14 E) $807.86

E. $807.86

You have been purchasing $12000 worth of stock annually for the past eight years and now have a portfolio valued at $87881. What is your annual rate of return? A) 4.32 percent B) 2.54 percent C) 3.29 percent D) -4.32 percent E) -2.54 percent

E. -2.54 percent

Franks Used Cars has sales of $807,200, total assets of $768,100, and a profit margin of 6.68 percent. The firm has a total debt ratio of 54 percent. What is the return on equity? A) 13.09 percent B) 12.04 percent C) 11.03 percent D) 8.56 percent E) 15.26 percent

E. 15.26 percent

Your portfolio is invested 25 percent each in Stocks A and C, and 50 percent in Stock B. What is the standard deviation of your portfolio given the following information A) 6.52 percent B) 9.64 percent C) 12.72 percent D) 10.89 percent C) 7.39 percent

E. 7.39 percent

Alicia is considering adding toys to her gift shop. She estimates that the cost of inventory will be $9,500. The remodeling expenses and shelving costs are estimated at $850. Toy sales are expected to produce net cash inflows of $1,300, $4,900, $4,400, and $4,100 over the next four years, respectively. Should Alicia add toys to her store if she assigns a three-year payback period to this project? Why or why not? A) NO; The payback period is 3.94 years B) No; The payback period is 2.94 years C) Yes; The payback period is 3.94 years D) Yes; The payback period is 3.09 years E) Yes; The payback period is 2.94 years

E. Yes; The payback period is 2.94 years