MIDTERM

Mike's Inc. has an ROE of 10.8%, an equity multiplier of 1.21, and a net profit margin of 7.5%. Which of the following is correct? The asset turnover is .983. The ROA is 13.07%. The debt-to-equity ratio is .21. The asset turnover is 1.19.

The asset turnover is 1.19.

If a firm has a 100 percent dividend payout ratio, then the internal growth rate of the firm is: equal to ROA 100 percent infinite zero percent

zero percent

Using the Gordon model, find the value of Stock X in t4, or P4, if Div2=$2.5, g=2.5%, and R = 8%. $48.95 $45.45 $46.59 $47.76

$48.95

The 5 percent coupon bonds of ABC Corp. are selling for 103 percent of par value. The bonds mature in 7 years and pay interest semiannually. These bonds have a __(a)__ of 4.5 percent and a __(b)__ of 4.85 percent. (a) current yield; (b) YTM (a) current yield; (b) effective annual yield (a) YTM; (b) effective annual yield (a) YTM; (b) current yield

(a) YTM; (b) current yield

All else equal, ____(a)______ has a higher present value than ____(b)______. (a) an ordinary annuity; (b) an annuity due (a) an annuity due; (b) an ordinary annuity (a) a lumpsum CF discounted at a higher rate; (b) a lumpsum CF discounted at a lower rate (a) a lumpsum CF discounted for a longer period of time; (b) a lumpsum CF discounted for a shorter period of time

(a) an annuity due; (b) an ordinary annuity

The Regency Bank charges 2.2% per quarter. The ___(a)____ is 8.8%, and the ___(b)____ is 9.09%. (a) effective annual rate; (b) annual percentage rate (a) annual percentage rate; (b) effective annual rate (a) compounding rate; (b) discount rate (a) discount rate; (b) compounding rate

(a) annual percentage rate; (b) effective annual rate

A banker considering loaning money to a firm for ten years would most likely prefer the firm have a debt ratio of ________, and a times interest earned ratio of ________. .50; .75 .45; 1.75 .50; 1.00 .40; .75 .40; 1.75

.40; 1.75

The value of the variable "b" as used in the internal growth rate formula can be computed as: 1 − Dividend payout ratio. Total dividends/Net income. Net income/Total sales. 1 − PE ratio. 1 + Growth rate.

1 − Dividend payout ratio.

Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 20 years from now with a retirement income of $10,000 per month for 20 years, with the first payment received 20 years and 1 month from now. Second, he would like to purchase a Tesla in 10 years at an estimated cost of $137,088. Third, after he passes on at the end of the 20 years of withdrawals, he would like to leave an inheritance of $428,849. He can afford to save $5,000 per month for the next 10 years. If he can earn an APR of 6.1 percent before he retires and an APR of 6.5 percent after he retires, how much will he have to save each month in Years 11 through 20? Round your answer to two decimal places and input your answer as a POSITIVE number.

1192.7574

Healthy Foods just paid its annual dividend of $1.80 a share. The firm recently announced that all future dividends will be increased by 2.3 percent annually. What is one share of this stock worth to you if you require a 7.5 percent rate of return?

35.4115

In the formula, P4 = Div□ / (R - g), the dividend is for period: 2 5 3 4

5

Consider Banana Co. has the following income statement and balance sheet data for FY 2018. Suppose half of the net income in FY 2018 is spent as dividends, and the other half is added to retained earnings. In FY 2017, total shareholders' equity = 700. Use the following information, please compute CF to shareholders. Round your answer to two decimal places. Sales 2262 COGS 1655 Depreciation 90 Other Op. Expenses 298 Interest Expenses 48 Tax rate 34% Current Assets 761 Net Fixed Assets 1118 Current Liabilities 603 LT Liabilities 516

52.86

Based on the information given below, calculate the accounts receivable turnover for US Composite Corporation for the fiscal year 2012. Income Statement: Total Operating Revenues $2262 COGS $1655 SGA expenses $327 Depreciation $90 = Operating Income $190 Other Income $29 = EBIT $219 Interest Expense $49 = Pretax Income $170 Taxes $84 =Net Income $86 Balance Sheet: Cash and Equivalents $140 AR $294 Other $58 = Total Current Assets $761 PP&E $1668 Less Acc. Depreciation $$550 = Net PP&E $1118 = Total Assets $1879 AP $213 Notes Payable $50 Accrued Expenses $223 = Total Current Liabilities $486 Deferred Taxes $117 LT Debt $471 = Total LT Liabilities $588 = Total Liabilities $1074 Preferred Stock $39 Common Stock ($1 par value) $55 Capital Surplus $321 Acc. RE $390 = Total Equity $805 = Total Liabilities and Equity $1879

7.6939

Best Eastern has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in 14 years, and have a 6 percent coupon. The yield to maturity is 6.5%. What is its current price? Round your answer to two decimal places.

954.4918

Which account represents the book value of all of a corporation's net profits less its dividend payments? Preferred stock Treasury stock Accumulated retained earnings Common stock Capital surplus

Accumulated retained earnings

The rate of return required by investors in the market for owning a bond is called the: maturity. coupon. face value. yield to maturity. coupon rate.

yield to maturity.

Which of the following is NOT true? Assume a constant dividend growth. Increase in the capital gains yield will increase the current value of a stock. The total return on a stock is equal to the dividend yield plus the capital gains yield. Dividend growth rate is equivalent to dividend yield. The benchmark PE ratio can be used to value the stock of firms that pay no dividends.

Dividend growth rate is equivalent to dividend yield.

Choose all true statements about bond valuation. I. The yield to maturity on a premium bond exceeds the bond's coupon rate. II. The higher the yield to maturity, the lower the current price of the bond. III. The coupon rate is the coupon payment divided by the current price of the bond. IV. The regular interest payment of a bond is called the coupon payment. IV only II & IV only II only II, III and IV only

II & IV only II. The higher the yield to maturity, the lower the current price of the bond. IV. The regular interest payment of a bond is called the coupon payment.

Phillips Co. currently pays no dividend. The company is anticipating dividends of $.07, $.10, $.20, and $.30 over the next 4 years, respectively. After that, the company anticipates increasing the dividend by 3.5 percent annually. One step in computing the value of this stock today is to compute the value in: Year 6 Year 4 Year 5 Year 3

Year 4

Janis just won a scholarship that will pay her $500 a month, starting today and continuing for the next 48 months. The payments will be given every 1st day of the month. Her scholarship is an example of an __________________. ordinary annuity annuity due

annuity due

The total return on a stock is equal to all of the following, except for the _______________. dividend yield plus the dividend growth rate dividend yield plus the capital gains yield capital gains yield plus the dividend growth rate

capital gains yield plus the dividend growth rate

Given a stated interest rate, ________ compounding will yield the highest effective rate of interest. continuous annual quarterly daily monthly

continuous

All else unchanged, a decrease in the ____________ will decrease the net working capital of a firm. current assets fixed assets current liabilities EBIT

current assets

An asset that can be quickly converted into cash without significant loss in value is referred to as being: tangible. liquid. fixed. intangible. marketable

liquid.

The price-to-earnings ratio is a measure of _______________. liquidity profitability valuation efficiency

valuation