BA 220 Final

The future value of $1100, compounding at the rate of 6% annually, after 10 years is A. $1600 B. $1790.32 C. $1819.48 D. $1969.93

D. $1969.93

The present value of $5000 that you will get after 10 years, discounting at the rate of 5% per year, is A. $2598.29 B. $2897.23 C. $3004.23 D. $3069.57

D. $3069.57

Which of the following questions are addressed by financial managers? I How should a product be marketed? II Should customers be given 30 or 45 days to pay for the credit purchases? III Should the firm borrow more money? IV Should the firm acquire new equipment? A. I and II only B. II and III only C. I, II, and III only D. II, III and IV only

D. II, III and IV only

Suppose an investor wants to have $10 million to retire 45 years from now How much would she have to invest today with an annual interest equal to 15 percent? A. $18,561 B. $17, 844 C. $18,987 D. $17,389

A. $18,561

Which of the following statements concerning the payback period, is not true? A. It takes account of the time value of money B. The payback period measures the time that project will take to generate enough cash flows to cover the initial investment C. The payback period is simple to calculate and understand D. The payback period ignores cash flows after the payback point has been reached

A. It takes account of the time value of money

You are explaining time value of money factors to your friend. Which factor would you explain as being large? A. The future value of $1 for 12 periods at 6% is larger B. The present value of $1 for 12 periods is 6% is larger C. Neither one is larger because they are equal D. There is not enough information given to answer this question

A. The future value of $1 for 12 periods at 6% is larger

Which one of the following is a working capital management decision? A. determining whether to pay cash for a purchase or use the credit offered by the supplier B. determining the amount of long-term debt required to complete a project C. determining the number of shares of stock to issue to fund an acquisition D. determining whether or not a project should be accepted

A. determining whether to pay cash for a purchase or use the credit offered the supplier

The future value of $10,000 after 11 years, going at a rat elf 12% per year is A. $34,239.23 B. $34,522.71 C. $35,293.97 D. $34,987.23

B. $34,522.71

The amount money a person expects to have in the future is called A. principal B. Future Value C. Simple Interest D. Present Value

B. Future Value

A stakeholder is: A. a person who owns shares of a stock B. any person or entity other than a stockholder or creditor who potentially has a claim on the cash flow of a firm C. a person who initially founded a firm and currently has management control over that firm D. a creditor to whom a firm currently owes money

B. any person or entity other than a stockholder or creditor who potentially has a claim on the cash flow of a firm

The long-run objective of financial management is to: A. maximize earnings per share B. maximize the value of the firm's common stock C. maximize return on investment D. maximize market share

B. maximize the value of the firm's common stock

interest paid (earned) on only the original principal borrowed (lent) is often referred to as A. present value B. simple interest C. future value D. compound interest

B. simple interest

If the interest rate is 7%, then the present value of $40,000 that you expect to get after 15 years is A. $14,239.25 B. $15,230.51 C. $14,497.84 D. $13,297.37

C. $14,497.84

Which of the following statements concerning NPV is not true? A. The NPV technique takes account of the time value of money B. The NPV technique takes account of all the cash flow associated with a project C. If to competing projects are being considered, the one expected to yield the lowest NPV should be selected D. The NPV of a project is the sum of all the discounted cash flows associated with a project

C. If to competing projects are being considered, the one expected to yield the lowest NPV should be selected

Which one of the following terms is define as a conflict of interest between the corporate shareholders and the corporate managers? A. articles of incorporation B. corporate breakdown C. agency theory D. legal liability

C. agency theory

The second step for making a capital investment decision is to establish baseline criteria for alternatives. Which of the following would not be an acceptable baseline criterion? A. internal rate of return B. accounting rate of return C. inventory turnover D. payback method

C. inventory turnover

Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the initial investment? A. future value method B. internal rate of return (IRR) method C. net present value (NPV) D. discounted cash flow

C. net present value (NPV)

Which of the following terms is defined as the management of a firm's long-term investments? A. working capital management B. capital structure C. agency cost analysis D. capital budgeting

D. capital budgeting

Which one of the following terms is defined as the mixture of a firm's debt and equity financing? A. working capital management B. cash management C. capital budgeting D. capital structure

D. capital structure

The market price of a share of common stock is determined by: A. The board of directors of the firm B. the stock exchange on which the stock is listed C. the president of the company D. individuals buying and selling

D. individuals buying and selling the stock

"Shareholder wealth" in a firm is represented by: A. the number of people employed in the firm B. The book value of the firm's assets less the book value of its liabilities. C. the amount of salary paid to its employees D. the market price per share of the firm's common stock

D. the market price per share of the firm's common stock