FINAN 303 CH1-5 QUIZ

If I invest $10,000 today, what will the future value be if my money is compounded annually at 9.75% for 15 years? $33,516.52 $10,975 $40,370.85 $23,516.52

$40,370.85 (Solve for FV)

If the "debt to equity" ratio is 2.2, what is the "debt to assets" ratio? [Assume for simplicity, that liabilities and debt are synonymous.] 2.2 3.2 0.6875

0.6875 (2.2./3.2)

What is the future value of the following cash flows. The cash flows occur at the END of the period. Year 1: 1,000 Year 2: 2,000 Year 3: 3,000 Year 4: 5,000 Interest rate = 8.5% 11,887 12,121 10,925 11,008

11,887 (Compute for FV Y1=3,Y2=2,Y1=1,Y4=0)

What interest rate would I have to earn to triple my money over a 10 year period? Assume annual compounding.

11.61 (N=10,PV=-1,PMT=0,FV=3 Solve for I/Y)

Determine the taxes for the company based on the following information: Sales: $900 COGS: $400 Interest: $50 Depreciation: $75 Dividends: $60 Taxes: 30%

112.50 *(NET INCOME X TAX)

Calculate what the equivalent salary would need to be in 20 years if you are currently making $75,000 per year and the inflation rate is 3.0% per year over the 20 years.

135,458 (Solve for FV)

King Felix (Seattle Mariner Pitcher) will receive $29,000,000 in the final year of his contract (7 years from now). If the discount rate is 8% per year, what is the salary worth in today's dollars? For simplicity assume that he gets the salary in a lump sum exactly 7 years from now.

16921221.46 (Solve for PV)

Cash 47,250 Short term investments 3,800 Accounts Receivable 283,500 Inventories 141,750 Total Current Assets 476,300 Total Assets 807,500 What is the common size number for Inventories? 14.175 80.71 17.56

17.56 *(Inv/TA)

What is the effective interest rate charged by Visa if the nominal rate is 21.99% and it is compounded daily.

24.587 (2nd ICONV)

Determine net income based on the following information: Sales: $900 COGS: $400 Interest: $50 Depreciation: $75 Dividends: $60 Taxes: 30%

262.50 (REV-EX-TAX) NO DIVIDEND

If the return on assets for a firm is 14.5% and the firm is financed with 50% debt and 50% equity, what is the return on equity? 19.5% 29.0% 7.25%

29.0% (ROA/Debt)

Mr. Johnson's grandfather set up a trust fund that will pay him $1,000,000 on his 40th birthday. Today, Mr. Johnson turned 21, so he will need to wait 19 years to get his money. If the appropriate discount rate is 6%, what is the present value of the lump sum he will receive?

330,513 (N=19,I/Y=6,PMT=0,FV=1M, Solve for PV)

Mr. Darcy's perpetuity pays him 20,000 per year. Assume the payments occur at the end of each year and the interest rate is 5.5%. What is the present value of the perpetuity? It is infinite. 363,636 1,100 400,000

363,636 (500=N, Solve for PV)

Ben Franklin set aside $1,000 in an account for the benefit of Philadelphia. After taking into account all the money that gets used from the account each year, the account still grows by 5% in value each year. If he made the investment 265 years ago, what amount of money is in the account today? 14,250 747,652,449 129,503,467 412,253,407

412,253,407 (Solve for FV)

Calculate EBIT based on the following information: Sales: $900 COGS: $400 Interest: $50 Depreciation: $75 Dividends: $60 Taxes: 30%

425 *(S-COGS-DEPR)

What is inventory turnover for a firm with the following information. Use the formula with COGS instead of Sales: Sales: 900 COGS: 500 Depreciation: 100 Interest: 50 Inventory: 100 Accounts Receivable: 150 6 3 5 4

5 (COGS/Inv)

If inventories grew from 135,000 to 141,750 over the 2009 to 2010 years, what was the percentage increase in inventories? 5.0% 105% 1.05%

5.0% *(New#-Old#)/Old#

If I would like to invest $10,000 today and have it grow to $2 million by the time I retire, how long will I need wait if my money earns 10%? 47 years 52 years 59 years 100 years 56 years

56 years (PV=-10k, Solve for N)

What is the Days Sales Outstanding for a firm with the following information (assume 365 day year): Sales: 900 COGS: 500 Depreciation: 100 Interest: 50 Inventory: 100 Accounts Receivable: 150 0.167 days 40.56 days 60.83 days Not enough information 2.47 days

60.83 days *(AR / (S/365) )

Find the Present value of an ANNUITY DUE (i.e. payments are at the beginning of the period). It is 10 years, 8% and the payments are $1,000. 7,019 6,495 6,710 7,247

7,247 (Solve for PV, Change to BGN 2nd PMT, 2nd ENTER)

If I invest $5,000 and earn 8% per year, compounded annually for 5 years, what is the future value? 7346.64 7,934.37 7,725.39 8,125.76 8,067.51

7346.64 (Solve for FV)

What is the present value of the following cash flows (received at the End of the appropriate period): Year 1: 1,000 Year 2: 2,000 Year 3: 3,000 Year 4: 5,000 Discount rate = 8.5% 8,577 9,106 8,709 7,421

8,577 (Compute for PV)

Margie opened a used bookstore and is both the 100 percent owner and the store's manager. Which type of business entity does Margie own if she is personally liable for all the store's debts? A. Sole proprietorship B. Limited partnership C. Corporation D. Joint stock company E. General partnership

A

Stadford, Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt and equity is referred to as the firm's: A. capital structure. B. capital budget. C. asset allocation. D. working capital. E. risk structure.

A

What are the portions of a Statement of Cash Flows? Operating Cash Flows, Investing Cash Flows, Other Cash Flows Operating Cash Flows, Non Operating Cash Flows Operating Cash Flows, Investing Cash Flows, Financing Cash Flows Business Cash Flows, Bank Cash Flows, Investor Cash Flows

Operating Cash Flows, Investing Cash Flows, Financing Cash Flows

Which ratio below would give the best sense of the overall efficiency of the firm? Current Ratio Fixed Asset Turnover Total Debt to Total Assets Total Asset Turnover (TATO) Inventory Turnover

Total Asset Turnover (TATO)

The change in retained earnings over the course of an accounting period will typically be equal to: net income - dividends paid NOPAT EBIT (1-Tax Rate) net income + depreciation - interest

net income - dividends paid

For a credit card with a balance of $7,500 and an interest rate of 14.99% (monthly compounding, charged on the outstanding balance each month), how much total interest will you pay over the repayment period if your payment each month is 150? Approximately $4,337 Approximately $3,879 Approximately $857 Approximately $7,484 Approximately $5,955

Approximately $4,337

If you have a credit card with a balance of $7,500 and an interest rate of 14.99% (compounded monthly), what is the payoff amount (i.e. remaining principal amount) after 40 months of $150 payments? Approximately $1,781 Approximately $4,601 Approximately $3,992 Approximately $5,388 Approximately $2,487

Approximately $4,601

Where would you find Current Portion of Long Term Debt? Statement of Cash Flows - Operating Cash Flows Balance Sheet - NonCurrent Portion Balance Sheet - Current Assets Income Statement Balance Sheet - Current Liabilities

Balance Sheet - Current Liabilities

The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict? A. Organizational B. Structural C. Formation D. Agency E. Territorial

D

The primary goal of financial management is to maximize which one of the following for a corporation? A. Current profits B. Market share C. Number of shares outstanding D. Market value of existing stock E. Revenue growth

D

Which of the following are advantages of the corporate form of organization? I. Ability to raise large sums of equity capital II. Ease of ownership transfer III. Profits taxed at the corporate level IV. Limited liability for all owners A. I and II only B. III and IV only C. II, III, and IV only D. I, II, and IV only E. I, II, III, and IV

D

Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will equally share in the decision making and in the profits or losses. Which type of business did they create if they both have full personal liability for the firm's debts? A. Sole proprietorship B. Limited partnership C. Corporation D. Joint stock company E. General partnership

E

T/F Negative Free Cash Flow is always a bad thing for a company.

FALSE

Where would you find a company's interest expense? Balance Sheet Statement of Cash Flows Sources and Uses Statement Income Statement

Income Statement

On a credit card that currently has a $7,500 balance and an interest rate of 14.99% (compounded monthly, charged on the outstanding balance at the end of each month), how long will it take to pay off the card if I make payments of $150 each month? Unable to determine approximately 52 months approximately 96 months approximately 79 months

approximately 79 months

What are the three "levers" for Return on Equity? That is, what three ratios can be used to calculate return on equity? A. profit margin, total asset turnover and equity multiplier B. profit margin, debt ratio and return on assets C. inventory turnover, debt to equity and leverage D. profitability, efficiency and market value ratios

profit margin, total asset turnover and equity multiplier