# STR581 STR/581 FINAL EXAM CAPSTONE 40/40; ACC/561 AND FIN/571 - 75771

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STR581 STR/581 Final Exam Capstone 40/40; ACC/561 and FIN/571

1. Which of the following financial statements is concerned with the company at a point in time?

income statement

statement of cash flows

retained earnings statement

balance sheet

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

fixed cost

mixed cost

variable cost

manufacturing cost

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?

\$600

\$375

\$225

\$321

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.)

32%

16%

12%

40%

5. The process of evaluating financial data that change under alternative courses of action is called:

contribution margin analysis

cost-benefit analysis

double entry analysis

incremental 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:

among firms

within industries

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

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