RE take
You invested $6,500 at 6 percent simple interest. How much more could you have earned over a 10-year period if the interest had compounded annually? Multiple Choice $1,049.22 $930.11 $1,182.19 $1,201.15 $1,240.51
$1,240.51
What is the future value in 60 years of $7,440 invested today at 9 percent interest, compounded annually? Multiple Choice $1,309,673 $1,314,038 $38,256 $91,006 $14,469,253
$1,309,673
Hinojosa Music has projected annual net income of $272,600, of which 28 percent will be distributed as dividends. The company will sell $75,000 worth of common stock. What will be the cash flow to stockholders if the tax rate is 21 percent? Multiple Choice −$75,000 $1,328 $24,623.52 $76,328 $151,328
$1,328
The interest earned on both the initial principal and the interest reinvested from prior periods is called: Multiple Choice free interest. dual interest. simple interest. interest on interest. compound interest.
compound interest.
Jacob's Escape has accounts payable of $2,214, inventory of $7,950, cash of $1,263, fixed assets of $8,400, accounts receivable of $3,907, and long-term debt of $4,200. What is the value of the net working capital to total assets ratio? Multiple Choice .31 .42 .47 .51 .56
.51
Vaca Books has a net profit margin of 5.1 percent, a total asset turnover of 1.84, and a return on equity of 16.2 percent. What is the debt-equity ratio? Multiple Choice .73 .42 .81 .64 .83
.73
Zheng Equipment has total assets with a current book value of $368,900 and a current replacement cost of $486,200. The market value of these assets is $464,800. What is the value of Tobin's Q? Multiple Choice .79 .76 .96 1.26 1.05
.96
Twenty years from now, you hope to have $175,000 to buy a parcel of land. How much must you deposit as a lump sum today to achieve this goal at an interest rate of 6.6 percent, compounded annually? Multiple Choice $54,208.16 $48,740.95 $57,911.08 $40,019.82 $51,446.60
$48,740.95
A preferred stock pays an annual dividend of $5.20. What is one share of this stock worth today if the rate of return is 10.44 percent? Multiple Choice $51.48 $41.18 $49.81 $39.87 $42.90
$49.81
You just received a $5,000 gift from your grandmother which you have decided to save and then gift to your own grandchildren 50 years from now. How much additional money will you gift if you earn 7.5 percent interest rather than 7 percent interest over the next 50 years? (Assume annual compounding.) Multiple Choice $39,318.09 $39,464.79 $38,211.16 $37,811.99 $38,663.60
$38,663.60
Bianchi Crafts has an operating cash flow of $4,267 and depreciation of $1,611. Current assets decreased by $1,356 while current liabilities decreased by $2,662, and net fixed assets decreased by $382 during the year. What is free cash flow for the year? Multiple Choice $1,732 $2,247 $2,961 $3,915 $4,267
$1,732
Running Gear 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? Multiple Choice $145,985 $129,068 $119,655 $120,810 $134,585
$129,068
Claire's coin collection contains fifty 1948 silver dollars. Her grandparents purchased them at their face value in 1948. These coins have appreciated by 7.6 percent annually. How much is the collection expected to be worth in 2025? Multiple Choice $13,611.18 $18,987.56 $14,122.01 $11,218.27 $14,077.16
$14,077.16
Assume your mother invested a lump sum 28 years ago at 4.05 percent interest, compounded annually. Today, she gave you the proceeds of that investment, totaling $48,613.24. How much did your mother originally invest? Multiple Choice $14,929.00 $16,500.00 $15,994.70 $14,929.29 $16,500.93
$15,994.70
Echo Point has sales of $2,800, total assets of $1,900, and a debt-equity ratio of .5. Its return on equity is 15 percent. What is the net income? Multiple Choice $210 $130 $240 $350 $190
$190
The Tumbler has current liabilities of $350,000, a quick ratio of 1.65, inventory turnover of 4.7, and a current ratio of 2.9. What is the cost of goods sold? Multiple Choice $1,980,500 $1,760,750 $1,950,000 $2,056,250 $1,560,000
$2,056,250
Grace is retiring today and has $300,000 in her retirement savings. She expects to earn 8.5 percent per year compounded monthly. How much can she withdraw from her retirement savings each month if she plans to spend her last penny 17 years from now? Multiple Choice $18,793.23 $25,500.00 $2,784.88 $33,993.59 $2,832.80
$2,784.88
When you retire 45 years from now, you want to have $1.25 million saved. You think you can earn an average of 7.6 percent, compounded annually, on your investments. To meet your goal, you are trying to decide whether to deposit a lump sum today, or to wait and deposit a lump sum five years from today to fund this goal. How much more will you have to deposit if you wait for five years before making the deposit? Multiple Choice $17,414.14 $21,319.47 $19,891.11 $20,468.85 $13,406.78
$20,468.85
At the beginning of the year, a firm had current assets of $121,306 and current liabilities of $124,509. At the end of the year, the current assets were $122,418 and the current liabilities were $103,718. What is the change in net working capital? Multiple Choice −$19,679 −$11,503 $19,387 $15,497 $21,903
$21,903
hakur Industries has sales of $465,000, interest paid of $2,450, costs of 150,000, and depreciation of $20,400. What is the operating cash flow if the tax rate is 21 percent? Multiple Choice $217,242 $227,406 $245,356 $247,806 $253,649
$253,649
You are depositing $4,500 today at an annual interest rate of 7.2 percent, compounded annually. How much additional interest will you earn if you leave the money invested for 45 years instead of 40 years? Multiple Choice $25,723.08 $30,185.14 $22,441.56 $6,370.69 $11,590.93
$30,185.14
You want to start a business that you believe can produce cash flows of $44,000, $61,000, and $80,000 at the end of each of the next three years, respectively. At the end of three years you think you can sell the business for $200,000. At a discount rate of 9.7 percent, what is this business worth today? Multiple Choice $302,897 $291,636 $350,957 $151,397 $508,254
$302,897
You estimate that you will owe $28,200 in student loans by the time you graduate. If you want to have this debt paid in full within 10 years, how much must you pay each month if the interest rate is 5.4 percent per year compounded monthly? Multiple Choice $2,890.27 $1,525.57 $310.28 $3,723.31 $304.65
$304.65
Finn intends to save $2,000 per year, and expects to earn an annual rate of 6.9 percent. How much will he have in his account at the end of 37 years? Multiple Choice $406,429.10 $338,369.09 $297,407.17 $313,274.38 $308,316.67
$313,274.38
Jonathan invested $6,220 in an account that pays 11 percent simple interest. How much money will he have at the end of 40 years? Multiple Choice $33,588 $408,671 $106,905 $159,654
$33,588
Barnett Saddlery had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411. During the year, assets with a book value of $6,943 were sold. Depreciation for the year was $42,822. What is the amount of net capital spending? Multiple Choice $33,763 $40,706 $58,218 $65,161 $67,408
$33,763
Bourne Freestyle has cost of goods sold of $92,511, interest expense of $4,608, dividends paid of $3,200, depreciation of $14,568, an increase in retained earnings of $11,920, and a tax rate of 21 percent. What is the operating cash flow? Multiple Choice $34,296.00 $42,122.42 $36,462.58 $31,543.10 $36,741.42
$34,296.00
Assume you intend to retire 47 years from today. Your current salary is $80,000 per year, and you expect to earn salary increases of 3.25 percent each year. What annual salary do you expect to earn 47 years from today? Multiple Choice $359,685 $364,051 $7,436,927 $7,489,677 $8,605,705
$359,685
Thanh-Mi will receive $7,500 at the end of Year 2, $9,000 at the end of Year 3, and $12,500 at the end of Year 4. What is the future value of these cash flows at the end of Year 6 if the interest rate is 8 percent? Multiple Choice $38,418.80 $32,907.67 $36,121.08 $39,010.77 $33,445.44
$36,121.08
Your anticipated wedding is three years from today. You don't know who your spouse will be but you do know that you are saving $10,000 today and $17,000 one year from today for this purpose. You also plan to pay the final $12,000 of anticipated costs on your wedding day. At a discount rate of 5.5 percent, what is the current cost of your upcoming wedding? Multiple Choice $36,333.11 $41,065.25 $36,895.17 $38,411.08 $35,248.16
$36,333.11
What is the future value of $8,500 invested at the end of each year for 40 years, at 10.8 percent interest compounded annually? Multiple Choice $3,278,406.16 $4,681,062.12 $2,711,414.14 $3,989,476.67
$4,681,062.12
At the beginning of the year, Smidovec Plumbing had current liabilities of $15,932 and total debt of $68,847. By year end, current liabilities were $13,870 and total debt was $72,415. What is the amount of net new borrowing for the year? Multiple Choice $5,630 −$2,480 $3,568 $4,677 −$2,062
$5,630
Assume a 1-year loan for $6,000 has an interest rate of 4.5 percent compounded annually. How much additional interest would be charged if the rate had compounded continuously rather than annually? Multiple Choice $5.84 $6.17 $6.10 $5.93 $6.28
$6.17
Racing Motors wants to save $825,000 to buy some new equipment three years from now. The plan is to set aside an equal amount of money on the first day of each quarter starting today. How much does the company need to save each quarter to achieve its goal if it can earn 4.45 percent on its savings? Multiple Choice $63,932.91 $62,969.70 $63,192.05 $62,925.00 $64,644.17
$63,932.91
The balance sheet of Perez Printing shows $680 in inventory, $2,140 in fixed assets, $210 in accounts receivables, $250 in accounts payable, and $80 in cash. How much net working capital does the company have? Multiple Choice $970 $720 $640 $3,110
$720
Clark-Phillips Incorporated purchased $145,000 in new equipment and sold equipment with a net book value of $68,400 during the year. What is the amount of net capital spending if the depreciation was $38,600? Multiple Choice $115,200 $76,600 $94,200 $38,000 −$38,000
$76,600
What is the future value of $1,575 deposited at the end of each year for 25 years? Assume an interest rate of 6.3 percent compounded annually. Multiple Choice $76,919.04 $72,545.78 $90,152.04 $92,006.08 $91,315.09
$90,152.04
The Somerville Corporation has cost of goods sold of $11,518, interest expense of $315, dividends of $420, depreciation of $811, and a change in retained earnings of $296. What is the taxable income given a tax rate of 21 percent? Multiple Choice $955.38 $967.78 $906.33 $776.41 $646.15
$906.33
What is the present value of $45,000 to be received 50 years from today if the discount rate is 8 percent, compounded annually? Multiple Choice $959.46 $1,147.07 $841.41 $1,106.18 $1,291.06
$959.46
Njoku Marketing paid $1,282 in interest and $975 in dividends last year. Current assets increased by $2,700, current liabilities decreased by $420, and long-term debt increased by $2,200. What was the cash flow to creditors? Multiple Choice −$530 -$918 $1,839 2,132 $3,094
-$918
Which one of the following is a source of cash for a tax-exempt firm? Multiple Choice Increase in accounts receivable Increase in depreciation Decrease in accounts payable Increase in common stock Increase in inventory
Increase in common stock
Soran Freight Forwarding has total assets of $694,800 at year's end. The beginning owners' equity was $362,400. During the year, the company had sales of $711,000, a net profit margin of 5.2 percent, a tax rate of 21 percent, and paid $12,500 in dividends. What is the equity multiplier at year end? Multiple Choice 1.67 1.72 1.93 1.80 1.86
1.80
A 1-year loan of $15,000 is quoted at 6.7 percent plus 3 points. This loan is to be repaid in one lump sum. What is the actual cost of this loan? Multiple Choice 11.86% 6.91% 12.55% 10.00% 9.70%
10.00%
The Friendly Bank wants to earn an EAR of 12 percent on its consumer loans. The bank uses daily compounding. What rate is the bank most apt to quote on these loans? Multiple Choice 11.76% 11.38% 11.33% 12.12% 12.00%
11.33%
Fierro Fitness had sales of $3,340, net income of $274, net fixed assets of $2,600, and current assets of $920. The firm has $430 in inventory. When evaluating last year's performance, what is the common-size statement value of inventory? Multiple Choice 12.22% 44.16% 16.54% 13.36% 46.74%
12.22%
Wood Recovery has sales of $397,000, total assets of $225,000, and total debt of $101,700. The net profit margin is 6.2 percent. What is the return on equity? 19.96% 5.99% 32.20% 1.32% 10.94%
19.96%
Anytime Coffee 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? Multiple Choice 2.12 1.84 1.39 2.45 2.69
2.12
Castaneda Accounting has sales of $332,700, cost of goods sold of $221,800, inventory $13,700, accounts receivable of $22,400, and accounts payable of $11,900. How many days of sales are in receivables? Multiple Choice 14.85 days 19.58 days 24.57 days 48.53 days 22.55 days
24.57 days
A firm has a debt-total asset ratio of 61 percent and a return on total assets of 11.4 percent. What is the return on equity? Multiple Choice 26.27% 29.23% 18.48% 10.95% 13.50%
29.23%
Billings Incorporated has net income of $161,000, a net profit margin of 7.6 percent, and an accounts receivable balance of $127,100. Assume that 66 percent of sales are on credit. What is the days' sales in receivables? Multiple Choice 21.90 days 27.56 days 33.18 days 35.04 days 36.19 days
33.18 days
Aidan deposited $8,500 in an account today. If the account earns 8.5 percent per year, compounded annually, how many years will it take for the account to reach a balance of $138,720? Multiple Choice 34.23 years 29.78 years 46.55 years 16.32 years 6.13 years
34.23 years
Lawn Care, Incorporated, has sales of $367,400, costs of $183,600, depreciation of $48,600, interest of $39,200, and a tax rate of 21 percent. The firm has total assets of $328,700, long-term debt of $62,400, and current liabilities of $76,300. What is the return on equity? Multiple Choice 39.92% 76% 25.21% 78.78% 29.02%
39.92%
Park Resources has sales of $687,400, cost of goods sold of $454,200, and a net profit margin of 5.5 percent. The balance sheet shows common stock of $324,000 with a par value of $5 a share, and retained earnings of $689,500. What is the price-sales ratio if the market price is $43.20 per share? Multiple Choice 4.28 12.74 6.12 4.07 14.51
4.07
Sixty years ago, your grandmother invested $4,500. Today, that investment is worth $430,065.11. What is the average annually compounded rate of return she earned on this investment? Multiple Choice 6.67% 11.71% 7.90% 10.40% 12.02%
7.90%
All else constant, which one of the following will result in the lowest present value of a lump sum? Multiple Choice 6 percent interest for 5 years 6 percent interest for 8 years 6 percent interest for 10 years 8 percent interest for 5 years 8 percent interest for 10 years
8 percent interest for 10 years
What is the APR on a loan with a stated rate of 2.35 percent per quarter? Multiple Choice 9.40% 8.69% 8.38% 8.90% 9.74%
9.40%
Which of the following actions would be considered an agency problem? Multiple Choice An owner of a sole proprietorship takes company office supplies for personal use Both partners in a general partnership close the office early one day to go skiing A manager in a corporation buys shares of the company's stock when the price falls A manager in a corporation makes online personal travel arrangements during work hours A shareholder in a corporation sells shares of the company's stock when the price rises
A manager in a corporation makes online personal travel arrangements during work hours
On your tenth birthday, you received $300 which you invested at 4.5 percent interest, compounded annually. Your investment is now worth $756. How old are you today? Multiple Choice Age 20 Age 31 Age 30 Age 23 Age 21
Age 31
Which one of the following statements is correct? Multiple Choice If the total debt ratio is greater than .50, then the debt-equity ratio must be less than 1.0. Incorrect Long-term creditors would prefer the time's interest earned ratio be 1.4 rather than 1.5. The debt-equity ratio can be computed as 1 plus the equity multiplier. An equity multiplier of 1.2 means a firm has $1.20 in sales for every $1 in equity. An increase in the depreciation expense will not affect the cash coverage ratio.
An increase in the depreciation expense will not affect the cash coverage ratio.
Which one of the following compounding periods will yield the lowest effective annual rate given a stated future value at Year 5 and an annual percentage rate of 10 percent? Multiple Choice Annual Semi-annual Monthly Daily Continuous
Annual
Which one of the following statements is generally correct? Multiple Choice Private placements must be registered with the SEC. All secondary markets are auction markets. Dealer markets have a physical trading floor. Auction markets match buy and sell orders. Dealers arrange trades but never own the securities traded.
Auction markets match buy and sell orders.
Total income taxes divided by total taxable income equals the ______ tax rate. Multiple Choice deductible average total residual marginal
Average
On a common-base year financial statement, inventory for the current year will be expressed relative to which one of the following? Multiple Choice Base-year inventory Current year total assets Base-year sales Base-year total assets Current year sales
Base-year inventory
Deciding which long-term investment a firm should make is a ______ decision. Multiple Choice working capital management capital constraints cost of capital capital budgeting capital structure
Capital Budgeting
Which of the following parties are not considered stakeholders of a firm? Multiple Choice Employees Government CompetitorsCorrect Customers Suppliers
Competitors
Which form of business would be the best choice if it were necessary to raise large amounts of capital? Multiple Choice Sole proprietorship Limited liability company Corporation General partnership Limited partnership
Corporation
Which one of the following statements regarding corporations is correct? Multiple Choice The majority of firms in the U.S. are structured as corporations. Undistributed corporate profits are taxable income to the shareholders. Corporations can have an unlimited life. Shareholders are protected from all potential losses. Shareholders directly elect the chief financial officer.
Corporations can have an unlimited life
The articles of incorporation: Multiple Choice describe the purpose of the firm and set forth the number of shares of stock that can be issued. are amended periodically especially prior to corporate elections. explain how corporate directors are to be elected and the length of their terms. set forth the procedures by which a firm regulates itself. include only the corporation's name and intended life.
Describe the purpose of the firm and set forth the number of shares of stock that can be issued
Which one of the following is a disadvantage of the corporate form of business? Multiple Choice Shareholders may experience limited liability. Distributed profits may experience double taxation. Raising capital may be more difficult than for other forms of business. The firm may have unlimited life. The firm may issue additional shares of stock.
Distributed Profits May experience double taxation
The relationship between the return on assets and the return on equity is identified by the: Multiple Choice net profit margin. profitability determinant. balance sheet multiplier. DuPont identity. debt-equity ratio.
DuPont Identity
The value of which one of the following is excluded from the firm's book value, but is included in the market value? Multiple Choice Transportation equipment Computer software Distribution warehouse Land acquired more than 50 years ago Employees' collective experience level
Employees' collective experience level
The most common type of medium-term, amortized business loans has which one of these characteristics over its life? Multiple Choice Equal principal payments One lump-sum principal paymentIncreasing principal payments Equal interest payments Declining periodic payments
Equal principal payments
A sole proprietorship: Multiple Choice has a limited life. can generally raise large sums of capital quite easily. can transfer ownership of the firm more easily than a corporation can. is taxed the same as a C corporation is the most regulated form of organization.
Has a limited life
Caroline is going to receive a award of $20,000 six years from now. Jiexin is going to receive an award of $20,000 nine years from now. Which one of the following statements is correct if both individuals apply a discount rate of 7 percent? Multiple Choice The present values of Caroline's and Jiexin's awards are equal. In future dollars, Jiexin's award is worth more than Caroline's award. In today's dollars, Caroline's award is worth more than Jiexin's. Twenty years from now, the value of Caroline's award will equal the value of Jiexin's award.
In today's dollars, Caroline's award is worth more than Jiexin's.
Which one of the following questions is least likely to be addressed by financial managers? Multiple Choice In which region of the country should a new product be launched? Should customers be given 30 or 45 days to pay for their credit purchases? Should the firm pay off its debt early? Should the firm acquire new equipment? How much cash should the firm keep on hand?
In which region of the country should a new product line be launched
This morning, Clayton deposited $2,500 into an account that pays 5 percent interest, compounded annually. Also this morning, Jayda deposited $2,500 at 5 percent interest, compounded annually. Clayton will withdraw his interest earnings and spend it as soon as possible. Jayda will reinvest her interest earnings into her account. Given this information, which one of the following statements is true? Multiple Choice Jayda will earn more interest in Year 1 than Clayton will earn. Clayton will earn more interest in Year 3 than Jayda will earn. Jayda will earn more interest in Year 2 than Clayton will earn. After five years, Clayton and Jayda will both have earned the same amount of interest. Clayton will earn compound interest.
Jayda will earn more interest in Year 2 than Clayton will earn.
Abigail, Blake and Camila plan to launch a business. Abigail will fund the venture but wants to limit her liability to her initial investment. She has no interest in the daily operations. Blake will contribute his full efforts on a daily basis but has limited funds to invest in the business. Camila will be involved as a consultant and manager and will also contribute funds. Blake and Camila are willing to accept liability for the firm's debts as they feel they have nothing to lose by doing so. All three individuals will share in the firm's profits and wish to minimize the initial costs of organizing the business. Which form of business entity should these individuals adopt? Multiple Choice Sole proprietorship Joint stock company Limited partnership General partnership Corporation
Limited Partnership
Which one of the following statements related to liquidity is correct? Multiple Choice Any asset that can be sold for cash is considered liquid. Inventory is more liquid than accounts receivable because inventory is tangible. Liquid assets are defined as assets that can be sold quickly regardless of the price obtained. Liquid assets are valuable to a firm. Liquid assets tend to earn a higher rate of return than illiquid assets.
Liquid assets are valuable to a firm.
The Sarbanes-Oxley Act of 2002 is a governmental response to: Multiple Choice decreasing corporate profits. the terrorist attacks on 9/11/2001. the harm caused to stock markets by SARS, MERS, COVID-19, and other pandemics. deregulation of the stock exchanges. management greed and abuses.
Management greed and abuse
A sole proprietorship: Multiple Choice is designed to protect the personal assets of the owner. may earn profits that are subject to double taxation. requires the owner to be personally responsible for all of the company's debts. is the least represented type of firm in the U.S. today. provides the same benefits to owners that a limited liability company does.
Requires the owner to be personally responsible for all the company's debts
Financial managers should primarily focus on the interests of: Multiple Choice themselves the vice president of finance. their immediate supervisor. shareholders. the board of directors
Shareholders
Which one of the following questions involves a capital budgeting decision? Multiple Choice How many shares of stock should the firm issue? Should the firm purchase a new machine for the production line? Should the firm borrow money to acquire new equipment? How much inventory should the firm keep on hand? How much money should be kept in the checking account?
Should the firm purchase a new machine for the production line?
Which one of the following is a working capital management decision? Multiple Choice What equipment will be required to complete a project? Should the firm require immediate payment from customers or offer credit terms? What amount of long-term debt is required to complete a project? What percentage of the firm's equity should the firm issue to fund an acquisition? Which one of several acceptable projects should be implemented?
Should the firm require immediate payment from customers or offer credit terms?
Sophia and Mallory are the same age. At age 25, Sophia invests $6,000 at 7 percent, compounded annually. At age 30, Mallory invests $6,000 at 7 percent, compounded annually. All else constant, when they both reach age 60: Multiple Choice Sophia will have less money when she retires than Mallory. Mallory will earn more interest on interest than Sophia. Mallory will earn more compound interest than Sophia. they must wait 10 more years to have equal amounts of savings. Sophia will have more money than Mallory.
Sophia will have more money than Mallory.
Which one of the following statements is correct? Multiple Choice A general partnership is a legal person. Taxable income earned by a partnership is treated as individual income. Partnerships are the most complicated type of business to form. All partnerships are required to have at least one limited partner. Only firms organized as partnerships have limited lives.
Taxable income earned by a partnership is treated as individual income
Which one of the following statements concerning corporate income taxes is correct? Multiple Choice U.S. corporations are exempt from federal taxation. Corporations pay no tax on their first $50,000 of income. The federal income tax is applied at a flat rate across all levels of taxable income. The marginal tax rate will always be lower than the average tax rate. The first 25 percent of corporate income is exempt from taxation.
The federal income tax is applied at a flat rate across all levels of taxable income.
Which one of the following must be true if a firm had a negative cash flow from assets? Multiple Choice The firm borrowed money. The firm obtained external funding The firm had a net loss for the period. The firm acquired new fixed assets. Newly issued shares of stock were sold.
The firm obtained external funding
Limited partners benefit from which of the primary advantages? Multiple Choice They have the opportunity to earn tax-free income .Their responsibility for the firm's debts is prorated based on their percentage of ownership. They do not face any potential financial losses. They have control over the administrative affairs of the partnership. Their maximum loss cannot exceed the amount of their capital investment.
Their maximum loss cannot exceed the amount of their capital investment.
Which one of the following statements correctly defines a time value of money relationship? Multiple Choice Time and future values are inversely related, all else held constant. Interest rates and time are positively related, all else held constant. An increase in a positive discount rate increases the present value. An increase in time increases the future value given a zero rate of interest. Time and present value are inversely related, all else held constant.
Time and present value are inversely related, all else held constant.
Your credit card charges you .85 percent interest per month. This rate when multiplied by 12 is called the ____ rate. Multiple Choice effective annual annual percentage periodic interest compound interest episodic interest
annual percentage
The interest rate that is most commonly quoted by a lender is referred to as the: Multiple Choice annual percentage rate. compound rate. effective annual rate. simple rate. common rate.
annual percentage rate.
According to the statement of cash flows, an increase in inventory will ______ the cash flow from ______ activities. Multiple Choice increase; operating decrease; financing decrease; operating increase; financing increase; investment
decrease; operating
Madelyn is calculating the present value of a bonus she will receive next year. The process she is using is called: Multiple Choice growth analysis. discounting. accumulating. compounding. reducing.
discounting.
Cash flow to stockholders is defined as: Multiple Choice the total amount of interest and dividends paid during the past year. the change in total equity over the past year. cash flow from assets plus the cash flow to creditors. operating cash flow minus the cash flow to creditors. dividend payments less net new equity raised.
dividend payments less net new equity raised.
An ordinary annuity is best defined as: Multiple Choice increasing payments paid for a definitive period of time. increasing payments paid forever. Incorrect equal payments paid at the end of regular intervals over a stated time period. equal payments paid at the beginning of regular intervals for a limited time period. equal payments that occur at set intervals for an unlimited period of time.
equal payments paid at the end of regular intervals over a stated time period.
The growth of both sole proprietorships and partnerships is frequently limited by the firm's: Multiple Choice double taxation. bylaws. inability to raise cash. limited liability. agency problems.
inability to raise cash
Which one of the following is least apt to help convince managers to work in the best interest of the stockholders? Assume there are no golden parachutes. Multiple Choice Compensation based on the value of the stock Stock option plans Threat of a company takeover Threat of a proxy fight Increasing managers' base salaries
increasing managers' base salaries
As the degree of financial leverage increases, the: Multiple Choice probability a firm will encounter financial distress increases. amount of a firm's total debt decreases. less debt a firm has per dollar of total assets. number of outstanding shares of stock increases. accounts payable balance decreases.
probability a firm will encounter financial distress increases.
Ratios that measure a firm's liquidity are known as ______ ratios. Multiple Choice asset management long-term solvency short-term solvency profitability book value
short-term solvency
For the year, Movie Mania increased current liabilities by $1,400, decreased cash by $1,200, increased net fixed assets by $340, increased accounts receivable by $200, and decreased inventory by $150. What is the annual change in net working capital? Multiple Choice −$2,550 −$70 $590 $550 −$2,210
−$2,550
