Str 581 Week 2 Capstone Exam Essay

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STR 581 WEEK 2 CAPSTONE EXAM

STR 581 WEEK 2 CAPSTONE EXAM
1. Which of the following financial statements is concerned with the company at a point in time?

2. A cost which remains constant per unit at various levels of activity is a:

3. M&M Proposition 1: Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 10 percent of the stock.

If Dynamo wishes to change its capital structure from 75 percent equity
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If their required rate of return if 14 percent, what is the present value of their dividends over the next four years?

12. TuleTime Comics is considering a new show that will generate annual cash flows of $100,000 into the infinite future. If the initial outlay for such a production is $1,500,000 and the appropriate discount rate is 6 percent for the cash flows, then what is the profitability index for the project?

13. Your firm has an equity multiplier of 2.47. What is the debt-to-equity ratio?

14. If a company’s weighted average cost of capital is less than the required return on equity, then the firm:

15. When a company assigns the costs of direct materials, direct labor, and both variable and fixed manufacturing overhead to products, that company is using:

16. The major element in budgetary control is:

17. Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time:

18. Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?

19. The break-even point is where:

20. Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its depreciation and amortization expenses amounted to $84 million. The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Turnbull has an enterprise value/EBITDA multiple of 5.40.

What is the enterprise

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