Finance Exam 1

A firm has net working capital of $560, net fixed assets of $2,306, sales of $6,700, and current liabilities of $870. How many dollars worth of sales are generated from every $1 in total assets? $2.11 $1.55 $2.34 $2.91 $1.79

$1.79

Nu Furniture has sales of $241,000, depreciation of $32,200, interest expense of $35,700, costs of $103,400, and taxes of $14,637. What is the operating cash flow for the year? $108,229 $121,367 $122,963 $117,766 $128,037

$122,963

Marti'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 will the collection be worth in 2025? $13,611.18 $18,987.56 $14,122.01 $11,218.27 $14,077.16

$14,077.16

Your father invested a lump sum 28 years ago at 4.05 percent annual interest. Today, he gave you the proceeds of that investment, totalling $48,613.24. How much did your father originally invest? $14,929.47 $16,500.00 $15,994.70 $15,500.00 $16,099.45

$15,994.70

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 was the amount of the cash flow to stockholders? $5,100 $7,830 $18,020 $19,998 $20,680

$20,680

Al obtained a mortgage of $195,000 at 5.25 percent compounding monthly for 15 years. How much of the second monthly payment is applied to interest? $850.00 $852.09 $849.16 $853.13 $848.08

$850.00

Towne Station is saving money to build a new loading platform. Three years ago, they set aside $23,000 for this purpose. Today, that account is worth $31,406. What rate of interest is Towne Station earning on this investment? 8.39 percent 9.47 percent 10.94 percent 8.23 percent 9.01 percent

10.94 percent

Jogging Gear is considering a project with an initial cash requirement of $238,400. The project will yield cash flows of $4,930 monthly for 65 months. What is the APR on this project? 9.97 percent 11.38 percent 14.28 percent 13.41 percent 10.56 percent

11.38 percent

Today, you are retiring. You have a total of $289,416 in your retirement savings. You want to withdraw $2,500 at the last day of every month, starting today and expect to earn 4.6%, compounded monthly. How long will it be until you run out of money? 29.97 years 8.56 years 22.03 years 12.78 years 18.99 years

12.78 years

What is the average tax rate for a firm with taxable income of $76,700 in 2017? Taxable Income Tax Rate Income Rate $ 0 - 50,000 15 % $50,001 - 75,000 25% 75,001 - 100,000 34% 100,001 - 335,000 39% 28.25 percent 18.68 percent 26.48 percent 20.14 percent 29.03 percent

18.68 percent

You just paid $480,000 for an annuity that will pay you and your heirs $15,000 a year forever. What rate of return are you earning on this policy? 3.650 percent 3.100 percent 2.875 percent 3.125 percent 4.255 percent

3.125 percent

Jupiter's Home Systems has sales of $2,740, costs of goods sold of $2,080, inventory of $488, and accounts receivable of $422. How many days, on average, does it take Jupiter's to sell its inventory? 85.63 days 65.01 days 74.05 days 84.46 days 56.22 days

85.63 days

The DuPont identity can be used to help managers answer which of the following questions related to a company's operations? I. How many sales dollars are being generated per each dollar of assets? II. How many dollars of assets have been acquired per each dollar in shareholders' equity? III. How much net profit is being generating per dollar of sales? IV. Does the company have the ability to meet its debt obligations in a timely manner? I and III only II and IV only I, II, and III only II, III and IV only I, II, III, and IV

I, II, and III only

Which one of the following statements concerning liquidity measure is NOT correct? Liquidity ratios measure a firm's ability to meet its current liability. Current ratio and quick ratio can measure firm's liquidity. Quick ratio is always greater than current ratio. An increase in current liability, all else held constant, decreases quick ratio. An increase in inventory, all else held constant, increases current ratio.

Quick ratio is always greater than current ratio.

Which one of the following statements concerning net working capital is correct? Net working capital is a part of the operating cash flow. An increase in net working capital must also increase current assets. Depreciating an asset must decrease the value of a firm's net working capital. Total assets must decrease if net working capital decreases. Selling inventory at a loss decreases the value of a firm's net working capital.

Selling inventory at a loss decreases the value of a firm's net working capital.

Cash flow to stockholders is equal to 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. dividend payments plus net new equity raised. cash flow from assets minus the cash flow to creditors.

cash flow from assets minus the cash flow to creditors.

Which one of the following statements related to loan interest rates is correct? The annual percentage rate considers the compounding of interest. When comparing loans you should compare the effective annual rates. Lenders are most apt to quote the effective annual rate. Regardless of the compounding period, the effective annual rate will always be equal to the annual percentage rate The more frequent the compounding period, the lower the effective annual rate given a fixed annual percentage rate.

When comparing loans you should compare the effective annual rates.

A(n) ________ loan has regular payments that include both principal and interest but these payments are insufficient to pay off the loan. amortized continuous balloon pure discount interest-only

balloon

An annuity due is best defined as: increasing payments paid for a definitive period of time. increasing payments paid forever. 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 beginning of regular intervals for a limited time period.

Your grandmother has promised to give you $10,000 when you graduate from college. If you speed up your graduation by one year and graduate two years from now rather than the expected three years, the present value of this gift will: remain constant. increase. decrease. equal $10,000. be greater than $10,000 at 3% discount rate.

increase

Your goal is to have $1 million in your retirement savings on the day you retire. To fund this goal, you will make one lump sum deposit today. If you plan to retire ________ rather than ________ and earn a ________ rate of interest, then you have deposit a larger lump sum today. sooner; later; low sooner; later; high later; sooner; high later; sooner; low today; later; high

sooner; later; low