Financial literacy

1. A company has decided to improve their Engineering Department . The president

1. A company has decided to improve their Engineering Department. The president asked you, as the design engineer, to analyze and compare the difference between STRAIGHTLINE, MACR…

1. A company has preferred stock with a current market price of $18 per share. T

1. A company has preferred stock with a current market price of $18 per share. The preferred stock pays an annual dividend of 4% based on a par value of $100. Flotation costs asso…

1. A company invests $1,000,000 at the beginning of the year. It adds another $2

1. A company invests $1,000,000 at the beginning of the year. It adds another $250,000 at the end of the first quarter, withdraws $350,000 at the end of the second quarter, adds $…

1. A company is considering a capital project that will increase Sales Revenue b

1. A company is considering a capital project that will increase Sales Revenue by $2,000,000 per year. The project will also cause COGS Expense to rise by $400,000 each year. In a…

1. A company is deciding on whether to fund the following project. There are two

1. A company is deciding on whether to fund the following project. There are two possible market outcomes: “good” or “bad” –If the market state is good, the project value is estim…

1. A company issued 10,000 5-year bonds. Each bond has a par value of $1,000 and

1. A company issued 10,000 5-year bonds. Each bond has a par value of $1,000 and has a coupon rate of 4.5%. On the day the bonds were issued, the prevailing market interest rate w…

1. A company just paid a $2.00 per share dividend on its common stock (D 0 = $2.

1. A company just paid a $2.00 per share dividend on its common stock (D0 = $2.00). The dividend is expected to grow at a constant rate of 7 percent per year. The stock currently …

1. A company manufactures a product from a raw material, which is purchased at `

1. A company manufactures a product from a raw material, which is purchased at ` 54 per kg. The company incurs a handling cost of ` 350 plus freight of ` 400 per order. The increm…

1. A company will issue new common stock to finance an expansion. The existing c

1. A company will issue new common stock to finance an expansion. The existing common stock just paid a $1.50 dividend, and dividends are expected to grow at a constant rate 8% in…

1. A company will pay $2 dividends next year. These dividends are expected to gr

1. A company will pay $2 dividends next year. These dividends are expected to grow at a rate of 15% for four years. Afterwards, the long term growth rate is expected to settle at …

1. A company with bond debt of 8-, lease obligation of 20, total assets of 1,000

1. A company with bond debt of 8-, lease obligation of 20, total assets of 1,000 and total liabilities of 350 has a: total debt ratio approx of Debt-to-equity ratio of approx Long…

1. A company\'s 7% coupon rate, semiannual payment, $1,000 par value bond that m

1. A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $623.85. The company's federal-plus-state tax rate is 40%. Wh…

1. A company’s bonds have a par value of $1,000 par, 7.8% coupon rate and 30-yea

1.A company’s bonds have a par value of $1,000 par, 7.8% coupon rate and 30-year maturity. The bonds currently sell for $1,107.20 and pay coupon semi-annually. What is the bonds' …

1. A company’s financial statements consist of the balance sheet, income stateme

1. A company’s financial statements consist of the balance sheet, income statement, and statement of cash flows. Describe what each statement tells us and their limitations. 2. Wh…

1. A consultant at a top-tier firm has been signed to a three-year, $7 million c

1. A consultant at a top-tier firm has been signed to a three-year, $7 million contract. The details of the contract provide for an immediate cash bonus of $1 million. The consult…

1. A consumer product firm finds that its brand of laundry detergent is losing m

1.A consumer product firm finds that its brand of laundry detergent is losing market share, so it decides that it needs to “freshen” the product. One strategy is to maintain the c…

1. A contract that is entered into by a person who is under the age of contractu

1. A contract that is entered into by a person who is under the age of contractual capacity is: A. voidable. B. void. C. valid. D. unenforceable. 2. All of these are violations of…

1. A contract that is entered into by a person who is under the age of contractu

1. A contract that is entered into by a person who is under the age of contractual capacity is: A. voidable. B. void. C. valid. D. unenforceable. 2. All of these are violations of…

1. A contract that is entered into by a person who is under the age of contractu

1. A contract that is entered into by a person who is under the age of contractual capacity is: A. voidable. B. void. C. valid. D. unenforceable. 2. All of these are violations of…

1. A corporate bond has 20 years to maturity, a face value of $1,000, a coupon r

1. A corporate bond has 20 years to maturity, a face value of $1,000, a coupon rate of 5.2% and pays interest twice a year. The annual market interest rate for similar bonds is 3%…

1. A corporation can survive for a very long time. ? Longer, in? fact, than a hu

1. A corporation can survive for a very long time. ? Longer, in? fact, than a human lifetime. It should therefore have a very long planning horizon.?? A. In order to meet its? lon…

1. A corporation is selling an existing asset for $21,000. The asset, when purch

1. A corporation is selling an existing asset for $21,000. The asset, when purchased, cost $10,000, was being depreciated under MACRS using a five-year recovery period, and has be…

1. A corporation sold X units of product for $Y each and has $M in total fixed a

1. A corporation sold X units of product for $Y each and has $M in total fixed and $L in total variable costs (a) Find its break-even point (in units) in terms of L, M, X and Y. (…

1. A corporation with a taxable income of $50 million is considering a new ventu

1. A corporation with a taxable income of $50 million is considering a new venture that would generate an additional $500,000 per year in taxable income. How much additional feder…

1. A corporation\'s 10-year bonds have an equilibrium rate of return of 7 percen

1. A corporation's 10-year bonds have an equilibrium rate of return of 7 percent. For all securities, the inflation risk premium is 1.50 percent and the real interest rate is 3.0 …

1. A court settlement awarded an accident victim four payments of $50,000 to be

1. A court settlement awarded an accident victim four payments of $50,000 to be paid at the end of each of the next four years. Using a discount rate of 4%, calculate the present …

1. A court settlement awarded an accident victim four payments of $50,000 to be

1. A court settlement awarded an accident victim four payments of $50,000 to be paid at the end of each of the next four years. Using a discount rate of 4%, calculate the present …

1. A court settlement awarded an accident victim four payments of $50,000 to be

1. A court settlement awarded an accident victim four payments of $50,000 to be paid at the end of each of the next four years. Using a discount rate of 4%, calculate the present …

1. A credit analyst is looking at three different companies – an auto company, a

1. A credit analyst is looking at three different companies – an auto company, a drug company and a mining company. The auto and mining companies are cyclical. The drug company is…

1. A decrease in the expected future interest rate makesbonds______________ . a.

1. A decrease in the expected future interest rate makesbonds______________ . a.       Less attractive b.      More attractive c.       Less expensive d.      More expensive 2.   …

1. A discount factor: A. Is the same as compounding future cash flow B. performs

1. A discount factor: A. Is the same as compounding future cash flow B. performs the reverse function of a compounding interest rate C. allows investors to quantify a figure which…

1. A few years ago, Spider Web, Inc. issued bonds with a 12.03 percent annual co

1. A few years ago, Spider Web, Inc. issued bonds with a 12.03 percent annual coupon rate, paid semiannually. The bonds have a par value of $1,000, a current price of $1,079, and …

1. A financial manager is considering two projects, A and B. A is expected to ad

1. A financial manager is considering two projects, A and B. A is expected to add $2 million to profits this year while B is expected to add $1 million to profits this year. Which…

1. A financial manager should be more interested / concerned with the book balan

1. A financial manager should be more interested / concerned with the book balance than the net float and bank cash. True&False 2. ..........refers to the time required to cle…

1. A firm had Net Income of $1,000,000 and a payout ratio of 40%. If they are 70

1. A firm had Net Income of $1,000,000 and a payout ratio of 40%. If they are 70% equity financed, how much can they spend on capital expenditures before needing external equity? …

1. A firm has $ 3 million market value and it sells preferred stock with a par v

1. A firm has $ 3 million market value and it sells preferred stock with a par value of $100. If the coupon rate on the preferred stock is 9% and the preferred stock trades at $85…

1. A firm has 12,000 shares of common stock outstanding with a book value of $20

1. A firm has 12,000 shares of common stock outstanding with a book value of $20 per share and a market value of $39. There are 5,000 shares of preferred stock with a book value o…

1. A firm has a common stock with a market price $55 per share and an expected d

1. A firm has a common stock with a market price $55 per share and an expected dividend of $2.81 per share at the end of the coming year. The dividends paid on the outstanding sto…

1. A firm has a stock price of $50 per share. The firm’s past 12 month earnings

1. A firm has a stock price of $50 per share. The firm’s past 12 month earnings per share is $2.5 and the firm's future earning is $5 per share. The firm has an ROE of 20% and a d…

1. A firm has an opportunity to invest in a project and earn 600,000 next year f

1. A firm has an opportunity to invest in a project and earn 600,000 next year from it. The future years are expected to see cash flow growing at inflation, which is best predicte…

1. A firm has common stock of $100, paid-in-surplus of $300, total liabilities o

1. A firm has common stock of $100, paid-in-surplus of $300, total liabilities of 390, current assets of $380, and fixed assets of $630. What is the amount of the shareholder equi…

1. A firm has four divisions: the beta for the laundry services division is 0.4,

1. A firm has four divisions: the beta for the laundry services division is 0.4, the beta for the custom irrigation division is 0.9, the beta for the clown rental division is 1.3,…

1. A firm has multiple divisions of similar nature, yet varying degrees of risk.

1. A firm has multiple divisions of similar nature, yet varying degrees of risk. To assign required rates of return in the simplest manner possible and yet address the differences…

1. A firm has sales of $1,080, net income of $212, net fixed assets of $516, and

1. A firm has sales of $1,080, net income of $212, net fixed assets of $516, and current assets of $272. The firm has $87 in inventory. What is the common-size statement value of …

1. A firm has the following breakup of gross fixed assets- Land Building Plant a

1. A firm has the following breakup of gross fixed assets- Land Building Plant and Equipment Total 50,000 350,000 700,000 1,100,000 All depreciable assets are depreciated using st…

1. A firm has the opportunity to invest in a project that is expected to pay an

1.          A firm has the opportunity to invest in a project that is expected to pay an end-of-year annual return of $1.5 million for each of the next twenty years after taxes an…

1. A firm has undertaken a feasibility study to evaluate a project that has the

1. A firm has undertaken a feasibility study to evaluate a project that has the following estimated cashflows: -Amount borrowed to fund project is $200,000 with interest of 8% pa …

1. A firm has undertaken a feasibility study to evaluate a project that has the

1. A firm has undertaken a feasibility study to evaluate a project that has the following estimated cashflows: -Amount borrowed to fund project is $200,000 with interest of 8% pa …

1. A firm is considering changing their credit terms. It is estimated that this

1. A firm is considering changing their credit terms. It is estimated that this change would result in sales increasing by $1,800,000.This in turn would cause inventory to increas…

1. A firm is considering renewing its equipment to meet increased demand for its

1. A firm is considering renewing its equipment to meet increased demand for its product. The cost of equipment modifications is $1.9 million plus $100,000 in installation costs. …