Fin 486 Final Exam

Name___________________________________ MULTIPLE CHOICE. Choose the wizard alternative that best completes the statement or answers the question. 1) The primary emphasis of the fiscal manager is the use of A) coin f low-toned. B) profit incentives. C) organization charts. D) accrued earnings.1) _______2) both of the following(a) atomic number 18 key strengths of a corpo ration EXCEPT A) low organization lives. B) readily transferable ownership. C) limited liability. D) access to jacket crown markets.2) _______3) The ________ is a measure of liquidity which excludes ________, generally the least liquid summation. A) quick ratio accounts receivable B) current ratio accounts receivable C) current ratio account D) quick ratio inventory3) _______4) FASB Standard No. 52 mandates that U.S. establish companies mustiness translate their foreign-currency-denominated assets and liabilities into dollars employ the A) bonny rate. B) historical rate. C) current rate. D) no(prenominal ) of the above.4) _______ flurry 3.5 A financial manager at General powder Mines has gathered the financial data essential to swot up a pro forma balance sheet for cash and profit planning purposes for the coming class ended December 31, 2004. Using the percentageage-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 firm estimates sales of $1,000,000. (b) The firm maintains a cash balance of $25,000. (c) Accounts receivable represents 15 percent of sales. (d) Inventory represents 35 percent of sales. (e) A new piece of mining equipment costing $150,000 lead be purchased in 2004. Total depreciation for 2004 impart be $75,000. (f) Accounts payable represents 10 percent of sales. (g) There will be no change in annotations payable, accruals, and common stock. (h) The firm plans to retire a long term note of $100,000. (i) Dividends of $45,000 will be paid in 2004. (j) The firm predicts a 4 percent net profit margin. Balance Sheet General talcum Mines December 31, 20035) The pro forma total liabilities amount is (See tabularize 3.5) A) $650,000. B) $700,000. C) $500,000.5) _______ D) $550,000.6) If a coupled States Savings bond can be purchased for $29.50 and has a maturity regard as at the end of 25 years of $100, what is the one-year rate of retrogress on the bond? A) 6 percent B) 5 percent C) 7 percent D) 8 percent6) _______7) If a persons required return decreases for an change magnitude in risk, that person is said to be A) risk-indifferent. B) risk-seeking. C) risk-averse. D) risk-aware.7) _______Table 8.5 Cuda Marine Engines, Inc. must develop the relevant cash flows for a replacement crown enthronement proposal. The proposed asset costs $50,000 and has installation costs of $3,000. The asset will be depreciated using a five-year recovery schedule. The existent equipment, which originally cost $25,000 and will be interchange 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 anticipate to result in incremental before- assess net profits of $15,000 per year. The firm has a 40 percent tax rate. 8) The initial expending equals ________. (See Table 8.5) A) $44,100 B) $41,1008) _______ C) $38,800D) $38,960Table 9.6 Nuff Folding Box Company, Inc. is considering acquire a new gluing weapon. The gluing machine costs $50,000 and requires installation costs of $2,500. This outlay would be partially offset by the sale of an existing gluer. The existing gluer originally cost $10,000 and is four 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 remaining 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 (exclud ing 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 ordinary income and capital gains.9) The payback period for the barf is (See Table 9.6) A) in the midst of 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 twain capital budgeting proposals. The financial analysts have developed pessimistic, most likely, and optimistic estimates of the annual cash inflows which are given in the following table. The firms cost of capital is 10 percent.10) If the projects have five-year lives, the range of the net present value for tramp B is approximately ________. (See Table 10.1.) A) $201,000. B) $255,410. C) $303,280. D) $80,560.10) ______11) Th e ________ is the firms desired optimal mix of debt and honor financing. A) target capital structure B) book value C) cost of capital D) market value11) ______Table 14.5 Carens Canoes is considering relaxing its credit standards to encourage to a greater extent sales. As a result, sales are expected to increase 15 percent from 300 boats per year to 345 canoes per year. The average collection period is expected to increase to 40 days from 30 days and bad debts are expected to double the current 1 percent level. 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 enthronisation is 20 percent. 12) What is the cost of marginal bad debts under the proposed plan? (See Table 14.5) A) $765 B) $5,100 C) $383 D) $3,31512) ______13) Much of the mercantile paper is issued by A) venture capitalists. C) small businesses.13) ______ B) commercial finance companies. D) small manufacturing firms .14) The part of finance concerned with design and words 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 totaled $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