Fin 486 Final Exam

Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the financial statement or answers the question. 1) The primary emphasis of the financial manager is the use of A) coin flow. B) kale incentives. C) organization charts. D) accrued earnings.1) _______2) All of the following are list strengths of a corpo proportionalityn EXCEPT A) low organization be. B) readily transferrable ownership. C) limited liability. D) access to capital markets.2) _______3) The ________ is a measure of liquidity which excludes ________, in the main the least liquid asset. A) quick ratio accounts receivable B) up-to-date ratio accounts receivable C) current ratio inventorying D) quick ratio inventory3) _______4) FASB Standard No. 52 mandates that U.S. based companies must translate their foreign-currency-denominated assets and liabilities into dollars utilize the A) average rate. B) historical rate. C) current rate. D) none of the above.4) _______ bow 3.5 A financial manager at General Talc Mines has gathered the financial data essential to prepare a pro forma balance tack for bills and profit planning purposes for the coming division ended December 31, 2004. use the per centum-of- sales method and the following financial data, prepare the pro forma balance sheet in order to answer the following multiple choice questions. (a) The self-colored estimates sales of $1,000,000. (b) The whole maintains a immediate payment balance of $25,000. (c) Accounts receivable represents 15 percent of sales. (d) armory represents 35 percent of sales. (e) A tonic foot of mining equipment belling $150,000 go forth be purchased in 2004. Total dispraise for 2004 will be $75,000. (f) Accounts payable represents 10 percent of sales. (g) on that point will be no change in notes payable, accruals, and common stock. (h) The firm plans to go to sleep a long term note of $100,000. (i) Dividends of $45,000 will be paying in 2004. (j) The firm predicts a 4 percent net profit margin. Balance Sheet General Talc Mines December 31, 20035) The pro forma occur liabilities amount is (See tabularise 3.5) A) $650,000. B) $700,000. C) $500,000.5) _______ D) $550,000.6) If a United States Savings bond rear be purchased for $29.50 and has a maturity treasure at the end of 25 years of $100, what is the annual rate of return on the bond? A) 6 percent B) 5 percent C) 7 percent D) 8 percent6) _______7) If a persons required return decreases for an increase in risk, that person is verbalize to be A) risk-indifferent. B) risk-seeking. C) risk-averse. D) risk-aware.7) _______ shelve 8.5 Cuda Marine Engines, Inc. must develop the relevant cash flows for a replacement capital investment proposal. The proposed asset costs $50,000 and has quickness costs of $3,000. The asset will be depreciated employ a five-year recuperation instrument. The existing equipment, which originally cost $25,000 and will be sold for $10,000, has been depreciated using an MACRS five-year recovery schedule and three years of depreciation has already been taken. The new equipment is expected to result in incremental before-tax net profits of $15,000 per year. The firm has a 40 percent tax rate. 8) The initial outlay equals ________. (See evade 8.5) A) $44,100 B) $41,1008) _______ C) $38,800D) $38,960Table 9.6 Nuff Folding Box Company, Inc. is considering purchasing a new gluing cable car. The gluing utensil costs $50,000 and requires installation costs of $2,500. This outlay would be circumstancesially delete by the sale of an existing gluer. The existing gluer originally cost $10,000 and is four-spot years old. It is being depreciated under MACRS using a five-year recovery schedule and can currently be sold for $15,000. The existing gluer has a be useful life of five years. If held until year 5, the existing machines market value would be zero. Over its five-year life, the new machine should reduce operating costs (excludin g depreciation) by $17,000 per year. Training costs of employees who will operate the new machine will be a one-time cost of $5,000 which should be included in the initial outlay. The new machine will be depreciated under MACRS using a five-year recovery period. The firm has a 12 percent cost of capital and a 40 percent tax on run-of-the-mill income and capital gains.9) The payback period for the project is (See Table 9.6) A) between 4 and 5 years. B) 2 years. C) 3 years. D) between 3 and 4 years.9) _______Table 10.1 A corporation is assessing the risk of two capital budgeting proposals. The financial analysts postulate developed pessimistic, most likely, and optimistic estimates of the annual cash inflows which are assumption in the following table. The firms cost of capital is 10 percent.10) If the projects have five-year lives, the clutches of the net present value for Project B is approximately ________. (See Table 10.1.) A) $201,000. B) $255,410. C) $303,280. D) $80,560.10) ______11) The ________ is the firms desired optimal mix of debt and equity financing. A) target capital expression B) book value C) cost of capital D) market value11) ______Table 14.5 Carens Canoes is considering relaxing its credit standards to encourage more sales. As a result, sales are expected to increase 15 percent from 300 canoes per year to 345 canoes per year. The average collection period is expected to increase to 40 long time from 30 days and bad debts are expected to double the current 1 percent direct. The price per canoe is $850, the variable cost per canoe is $650 and the average cost per unit at the 300 unit level is $700. The firms required return on investment is 20 percent. 12) What is the cost of fringy bad debts under the proposed plan? (See Table 14.5) A) $765 B) $5,100 C) $383 D) $3,31512) ______13) Much of the commercial piece of music is issued by A) venture capitalists. C) small businesses.13) ______ B) commercial finance companies. D) small manufact uring firms.14) The part of finance concerned with design and delivery of advice and financial products to individuals, business, and government is called A) financial Manager. B) Financial Services. C) Managerial Finance. D) none of the above. Table 2.114) ______Information (2005 values) 1. Sales be $110,000 2. The gross profit margin was 25 percent. 3. Inventory turnover was 3.0. 4. There are 360 days in the year. 5. The average collection period was 65 days. 6. The current ratio was 2.40. 7. The total asset turnover was 1.13. 8. The debt ratio was 53.8 percent. 15) Inventory for CEE in 2005 was ________. (See Table 2.1) A) $32,448 B) $ 9,167 C) $36,667