FIN571 WEEK 1 FINALS EXAM (SOLUTION 100%) - 75341

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Which of the following is considered a hybrid organizational form?

a)      limited liability partnership

b)      sole proprietorship

c)      corporation

d)     partnership

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

a)      the CEO of the firm

b)      a shareholder

c)      a company engineer

d)     the board of directors

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?

a)      $1,844,022

b)      $803,010

c)      $2,303,010

d)     $2,123,612

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?

a)      The statement of retained earnings.

b)      The statement of cash flows.

c)      The statement of working capital.

d)     The statement of net worth.

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

a)      57.9 days

b)      65.2 days

c)      61.7 days

d)     64.3 days

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

a)      1.74

b)      0.60

c)      1.47

d)     0

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

a)      Evaluating a single firm’s performance over time.

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

c)      Conduct an industry group analysis.

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

Present value: 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.)

a)      $26,454

b)      $16,670

c)      $19,444

d)     $22,680

PV of multiple cash flows: 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.)

a)      $2,815,885

b)      $2,735,200

c)      $2,615,432

d)     $2,431,224

PV of multiple cash flows: 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.)

a)      $477,235

b)      $480,906

c)      $414,322

d)     $429,560

Future value of an annuity: JayadevAthreya 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.)

a)      $2,667,904

b)      $1,745,600

c)      $5,233,442

 d)     $3,594,524

Solution Description

Which of the following is considered a hybrid organizational form?

a)      limited liability partnership

b)      sole proprietorship

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