1. Investing in new asset and replacing an existing asset are related to. a. Capital structure d. Financial structure b. Capital budgeting e. None of the above c. Budgeting 2. In order to get better debt-to-equity ratio, firm will take which of the following's decision. a. Issue new stock d. Borrow from banks b. Extend credit to the customer e. Launch an innovative product c. Invest in a new asset 3. "Do not put all eggs in one basket" reflects. a. Risk and return d. (a) and (c) b. Inflation e. All of the above c. Diversification 4. "A penny received today is worth more than a penny received in the future", because of. a. Interest d. Inflation b. Risk e. All of the above c. Time value of money 5. Complete the given financial statements when retention ratio is 10 percent INCOME STATEMENT BALANCE SHEET EBIT Current Assets: Current Liabilities: Interest 7% Cash 100,000 Payables 15.000 Receivables Taxes 32% Long term debt EAT 2,845,800 Fixed Assets 250,000 Dividend Owners' Equity R.E. Total 400,000 Total 6. ABC Corp. shows the following information on its 2011 income statement: sales = $235,000; costs = $141,000; other expenses = $7,900; depreciation expense = $17,300; interest expense = $12,900; taxes = $19,565, dividends = $12,300. In addition, you're told that the firm issued $6,100 in new equity during 2011 and redeemed $4,500 in outstanding long-term debt. a. What is the 2011 operating cash flow? b. What is the 2011 cash flow to creditors? c. What is the 2011 cash flow to stockholders? d. If net fixed assets increased by $25,000 during the year, what was the addition to NWC