1. Which of the following financial statements is concerned with the company at a point in time?
statement of cash flows
retained earnings statement
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 to 60 percent equity and use the debt proceeds to pay a special dividend to shareholders, how much debt should they use?
4. 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.)
5. The process of evaluating financial data that change under alternative courses of action is called:
contribution margin analysis
double entry analysis
6. What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?
the discounted payback
the profitability index
the internal rate of return
the modified internal rate of return
7. The convention of consistency refers to consistent use of accounting principles:
throughout the accounting period
among accounting periods
8. External financing needed: Jockey Company has total assets worth $4,417,665. At year-end it will have net income of $2,771,342 and pay out 60 percent as dividends. If the firm wants no