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1. Which of the following is considered a hybrid organizational form?

Limited liability partnership

Partnership

Corporation

Sole proprietorship

2. Which of the following is a principal within the agency relationship?

A shareholder

A company engineer

The board of directors

The CEO of the firm

3. Which of the following presents a summary of the changes in a firm’s balance sheet from the beginning of an accounting period to the end of that accounting period?

The statement of cash flows.

The statement of retained earnings.

The statement of working capital.

The statement of net worth

4. Teakap, Inc., has current assets of $ 1,456,312 and total assets of $4,812,369 for the year ending September 30, 2006. It also has current liabilities of $1,041,012, common equity of $1,500,000, and retained earnings of $1,468,347. How much long-term debt does the firm have?

$2,303,010

$2,123,612

$803,010

$1,844,022

5. Gateway Corp. has an inventory turnover ratio of 5.6. What is the firm's days's sales in inventory?

64.3 days

57.9 days

65.2 days

61.7 days

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

0.60

1.74

0

1.47

7. Which of the following is not a method of “benchmarking”?

Utilize the DuPont system to analyze a firm’s performance.

Identify a group of firms that compete with the company being analyzed.

Conduct an industry group analysis

Evaluating a single firm’s performance over time.

8. Jack Robbins is saving for a new car. He needs to have $ 21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target? (Round to nearest dollar.)

$22,680

$26,454

$16,670

$19,444

9. Ferris, Inc., has borrowed from their bank at a rate of 8 percent and will repay the loan with interest over the next five years. Their scheduled payments, starting at the end of the year are as follows—$450,000, $560,000, $750,000, $875,000, and $1,000,000. What is the present value of these payments? (Round to the nearest dollar.)

$2,615,432

$2,431,224

$2,815,885

$2,735,200

10. Ajax Corp. is expecting the following cash flows—$79,000, $112,000, $164,000, $84,000, and $242,000—over the next five years. If the company's opportunity cost is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.)

$429,560

$477,235

$414,322

$480,906

11. Jayadev Athreya has started on his first job. He plans to start saving for retirement early. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent. How much will Jayadev have at the end of 45 years? (Round to the nearest dollar.)

$2,667,904

$3,594,524

$1,745,600

$5,233,442

12. Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year? (Round to the nearest percent.)

16%

32%

40%

12%

13. Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company's bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)

$923

$972

$1,066

$1,014

14. Next year Jenkins Traders will pay a dividend of $3.00. It expects to increase its dividend by $0.25 in each of the