Fin 370 Final Exam Version 2

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FIN 370 Final Exam version 2

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Download answer at http://www.examtutorials.com/course/fin-370-final-exam-version-2/
<div> 1) The goal of the firm should be</div><div></div><div></div><div></div><div>2) An example of a primary market transaction is</div><div></div><div></div><div></div><div></div><div></div><div>3) According to the agency problem, _________ represent the principals of acorporation.</div><div></div><div></div><div></div><div></div><div></div><div>4) Which of the following is a principle of basic financial management?</div><div></div><div></div><div></div><div>5) Another name for the acid test ratio is the</div><div></div><div></div><div></div><div>6) The accounting rate of return on stockholders’ investments is measured by</div><div></div><div></div><div></div><div>7) If you are an investor, which of the following would you prefer?</div><div></div><div></div><div></div><div></div><div></div><div>8) The primary purpose of a cash budget is to</div><div></div><div></div><div></div><div></div><div></div><div>9) Which of the following is a non-cash expense?</div><div></div><div></div><div></div><div>10) The break-even model enables the manager of a firm to</div><div></div><div></div><div></div><div></div><div></div><div>11) A zero-coupon bond</div><div></div><div></div><div></div><div></div><div></div><div>12) If you have $20,000 in an account earning 8% annually, what constant amount could you withdraw each year and have nothing remaining at the end of 5 years?</div><div></div><div></div><div></div><div></div><div></div><div>13) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?</div><div></div><div></div><div></div><div></div><div></div><div>14) The present value of a single future sum</div><div></div><div></div><div></div><div>15) Which of the following is considered to be a spontaneous source of financing?</div><div></div><div></div><div></div><div>16) Compute the payback period for a project with the following cash flows, if the company’s discount rate is 12%.Initial outlay = $450Cash flows: Year 1 = $325 Year 2 = $65 Year 3 = $100</div><div></div><div></div><div></div><div></div><div></div><div>17) For the NPV criteria, a project is acceptable if the NPV is __________, while for the profitability index, a project is acceptable if the profitability index is __________.</div><div></div><div></div><div></div><div></div><div></div><div>18) Which of the following is considered to be a deficiency of the IRR?</div><div></div><div></div><div></div><div></div><div></div><div>19) The firm should accept independent projects if</div><div></div><div></div><div></div><div></div><div></div><div>20) The most expensive source of capital is</div><div></div><div></div><div></div><div></div><div></div><div>21) The cost associated with each additional dollar of financing for investment projects is</div><div></div><div></div><div></div><div>22) The XYZ Company is planning a $50 million expansion. The expansion is to befinanced by selling $20 million in new debt and $30 million in new common stock. The before-tax required rate of return on debt is 9%, and the required rate of returnon equity is 14%. If the company is in the 40% tax bracket, what is the marginalcost of capital?</div><div></div><div></div><div></div><div></div><div></div><div>23) Shawhan Supply plans to maintain its optimal capital structure of 30% debt,20% preferred stock, and 50% common stock far into the future. The required return on each component is: debt–10%; preferred stock–11%; and common stock–18%. Assuming a 40% marginal tax rate, what after-tax rate of return must Shawhan Supply earn on its investments if the value of the firm is to remain unchanged?</div><div></div><div></div><div></div><div></div><div></div><div>24) Lever Brothers has a debt ratio (debt to assets) of 40%. Management is wondering if its current capital structure is too conservative. Lever Brothers’ present EBIT is $3 million, and profits available to common shareholders are $1,560,000, with 342,857 shares of common stock outstanding. FIN370 final exam If the firm were to instead have a debt ratio of 60%, additional interest expense would cause profits available to stockholders to decline to $1,440,000, but only 228,571 common shares would be outstanding. What is the difference in EPS at a debt ratio of 60%versus 40%?</div><div></div><div></div><div></div><div></div><div></div><div>25) Zybeck Corp. projects operating income of $4 million next year. The firm’s income tax rate is 40%. Zybeck presently has 750,000 shares of common stock which have a market value of $10 per share, no preferred stock, and no debt. The firm is considering two alternatives to finance a new product: (a) the issuance of $6million of 10% bonds, or (b) the issuance of 60,000 new shares of common stock. If Zybeck issues common stock this year, what will be the projected EPS next year?</div><div></div><div></div><div></div><div>26) _________ risk is generally considered only a paper gain or loss.</div><div></div><div></div><div></div><div></div><div></div><div>27) Capital markets in foreign countries</div><div></div><div></div><div></div><div></div><div></div><div>28) Buying and selling in more than one market to make a riskless profit is called</div><div></div><div></div><div></div><div>29) What keeps foreign exchange quotes in two different countries in line with eachother?</div><div></div><div></div><div></div><div>30) One reason for international investment is to reduce</div>
http://www.examtutorials.com/course/fin-370-final-exam-version-2/Download answer at https://www.examtutorials.com/course/fin-370-final-exam-version-2/
<div> 1) The goal of the firm should be</div><div></div><div></div><div></div><div>2) An example of a primary market transaction is</div><div></div><div></div><div></div><div></div><div></div><div>3) According to the agency problem, _________ represent the principals of acorporation.</div><div></div><div></div><div></div><div></div><div></div><div>4) Which of the following is a principle of basic financial management?</div><div></div><div></div><div></div><div>5) Another name for the acid test ratio is the</div><div></div><div></div><div></div><div>6) The accounting rate of return on stockholders’ investments is measured by</div><div></div><div></div><div></div><div>7) If you are an investor, which of the following would you prefer?</div><div></div><div></div><div></div><div></div><div></div><div>8) The primary purpose of a cash budget is to</div><div></div><div></div><div></div><div></div><div></div><div>9) Which of the following is a non-cash expense?</div><div></div><div></div><div></div><div>10) The break-even model enables the manager of a firm to</div><div></div><div></div><div></div><div></div><div></div><div>11) A zero-coupon bond</div><div></div><div></div><div></div><div></div><div></div><div>12) If you have $20,000 in an account earning 8% annually, what constant amount could you withdraw each year and have nothing remaining at the end of 5 years?</div><div></div><div></div><div></div><div></div><div></div><div>13) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?</div><div></div><div></div><div></div><div></div><div></div><div>14) The present value of a single future sum</div><div></div><div></div><div></div><div>15) Which of the following is considered to be a spontaneous source of financing?</div><div></div><div></div><div></div><div>16) Compute the payback period for a project with the following cash flows, if the company’s discount rate is 12%.Initial outlay = $450Cash flows: Year 1 = $325 Year 2 = $65 Year 3 = $100</div><div></div><div></div><div></div><div></div><div></div><div>17) For the NPV criteria, a project is acceptable if the NPV is __________, while for the profitability index, a project is acceptable if the profitability index is __________.</div><div></div><div></div><div></div><div></div><div></div><div>18) Which of the following is considered to be a deficiency of the IRR?</div><div></div><div></div><div></div><div></div><div></div><div>19) The firm should accept independent projects if</div><div></div><div></div><div></div><div></div><div></div><div>20) The most expensive source of capital is</div><div></div><div></div><div></div><div></div><div></div><div>21) The cost associated with each additional dollar of financing for investment projects is</div><div></div><div></div><div></div><div>22) The XYZ Company is planning a $50 million expansion. The expansion is to befinanced by selling $20 million in new debt and $30 million in new common stock. The before-tax required rate of return on debt is 9%, and the required rate of returnon equity is 14%. If the company is in the 40% tax bracket, what is the marginalcost of capital?</div><div></div><div></div><div></div><div></div><div></div><div>23) Shawhan Supply plans to maintain its optimal capital structure of 30% debt,20% preferred stock, and 50% common stock far into the future. The required return on each component is: debt–10%; preferred stock–11%; and common stock–18%. Assuming a 40% marginal tax rate, what after-tax rate of return must Shawhan Supply earn on its investments if the value of the firm is to remain unchanged?</div><div></div><div></div><div></div><div></div><div></div><div>24) Lever Brothers has a debt ratio (debt to assets) of 40%. Management is wondering if its current capital structure is too conservative. Lever Brothers’ present EBIT is $3 million, and profits available to common shareholders are $1,560,000, with 342,857 shares of common stock outstanding. FIN370 final exam If the firm were to instead have a debt ratio of 60%, additional interest expense would cause profits available to stockholders to decline to $1,440,000, but only 228,571 common shares would be outstanding. What is the difference in EPS at a debt ratio of 60%versus 40%?</div><div></div><div></div><div></div><div></div><div></div><div>25) Zybeck Corp. projects operating income of $4 million next year. The firm’s income tax rate is 40%. Zybeck presently has 750,000 shares of common stock which have a market value of $10 per share, no preferred stock, and no debt. The firm is considering two alternatives to finance a new product: (a) the issuance of $6million of 10% bonds, or (b) the issuance of 60,000 new shares of common stock. If Zybeck issues common stock this year, what will be the projected EPS next year?</div><div></div><div></div><div></div><div>26) _________ risk is generally considered only a paper gain or loss.</div><div></div><div></div><div></div><div></div><div></div><div>27) Capital markets in foreign countries</div><div></div><div></div><div></div><div></div><div></div><div>28) Buying and selling in more than one market to make a riskless profit is called</div><div></div><div></div><div></div><div>29) What keeps foreign exchange quotes in two different countries in line with eachother?</div><div></div><div></div><div></div><div>30) One reason for international investment is to reduce</div>
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