1. Pascarelli Corporation's inventory at the end of Year 2 was $122,000 and its inventory at the end of Year 1 was $150,000. Cost of goods sold amounted to $870,000 in Year 2. How long is the company's average sale period (turnover in days) for Year 2 closest to?

A. 57.0 days

B. 230.1 days

C. 32.3 days

D. 51.2 days

2. Czlapinski Corporation is considering a capital budgeting project that would require an initial investment of $440,000 and working capital of $32,000. The working capital would be released for use elsewhere at the end of the project in 4 years. The investment would generate annual cash inflows of $147,000 for the life of the project. At the end of the project, equipment that had been used in the project could be sold for $11,000. The company's discount rate is 7%. What is the net present value of the project closest to?

A. $58,698

B. $34,282

C. $159,000

D. $66,282

3. (Ignore income taxes in this problem.) An expansion at Fidell, Inc. would increase sales revenues by $75,000 per year and cash operating expenses by $38,000 per year. The initial investment would be for equipment that would cost $135,000 and have a 5 year life with no salvage value. The annual depreciation on the equipment would be $27,000. What percent is the simple rate of return on the investment closest to?

A. 13.3%

B. 7.4%

C. 20.0%

D. 27.4%

4. Shipley Corporation has provided the following data from its most recent balance sheet:

Total assets.. $760,000

Total liabilities. $590,000

Total stockholders equity.. $170,000

Which is the debt-to-equity ratio closest to?

A. 0.29

B. 0.22

C. 0.78

D. 3.47

5. (Ignore income taxes in this problem.) Assume you can invest money at a 14% rate of return. How much money must be invested now in order to be able to withdraw $5,000 from this investment at the end of each year for 8 years, the first withdrawal occurring one year from now?

A. $24,840

B. $21,440

C. $1,755

D. $23,195

6. Cutsinger Corporation has provided the following data from its most recent income statement:

Net operating income $55,000

Interest expense $43,000

Net Income before taxes. $12,000

Income taxes $4,000

Net income $8,000

What is the times interest earned ratio closest to?

A. 0.28

B. 1.83

C. 0.19

D. 1.28

7. Harris Corporation, a retailer, had a cost of goods sold of $290,000 last year. The beginning inventory balance was $26,000 and the ending inventory balance was $24,000. What was the corporation's inventory turnover closest to?

A. 12.08

B. 11.60

C. 5.80

D. 11.15

8. Strathman Corporation has provided the following information concerning a capital budgeting project:

Tax rate 30%

Expected life of project. 4

Investment required in equipment $200,000

Salvage value of equipment. $0

Annual sales. $520,000

Annual cash operating expenses $360,000

The company uses straight-line depreciation on all equipment. How much is the income tax expense in year 2?

A. $9,000

B. $48,000

C. $24,000

D. $33,000

9. Valotta Corporation has provided the following data concerning an investment project that it is considering:

Initial Investment $690,000

Working Capital. $70,000

Annual cash flow.. $ 283,000 per year

Salvage value at the end of the project. $21,000

Expected life of the project 4 years

Discount rate 11%

The working capital would be released for use elsewhere at the end of the project. What is the net present value of the project closest to?

A. $131,988

B. $178,118

C. $201,988

D. $463,000

10. (Ignore income taxes in this problem.) Riveros, Inc. is considering the purchase of a machine that would cost $120,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $29,000. The machine would reduce labor and other costs by $25,000 per year. Additional working capital of $9,000 would be needed immediately. All of this working capital would be recovered at the end of the life of the machine. The company requires a minimum pretax return of 18% on all investment projects. What is the net present value of the proposed project closest to?

A. $(63,683)

B. $(10,336)

C. $(18,050)

D. $(16,942)

11. In a statement of cash flows, a change in an income taxes payable account would be recorded in which section?

A. Stockholders' equity section

B. Financing activities section

C. Operating activities section

D. Investing activities section

12. Kaeser Corporation's most recent balance sheet appears below:

Comparative Balance Sheet

Assets Ending Balance Beginning Balance

Current Assets

Cash and cash equivalents. $44 $36

Accounts receivable.. 54 60

Inventory. 32 37

Total Current Assets.130 133

Property, plant and equipment.527 460

Less Accumulated depreciation...339 289

Net property, plant and equipment..188 171

Total Assets$ 318 $ 304

Liabilities and stockholders equity

Current Liabilities:

Accounts Payable..$46 $41

Accrued liabilities 54 17

Income taxes payable26 29

Total current liabilities 92 87

Bonds Payable.. 145 180

Total Liabilities.237 267

Stockholders equity:

Common Stock31 30

Retained earnings.50 7

Total Stockholders equity..81 37

Total liabilities and stockholders equity. $318 $304

The company's net income for the year was $52 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $9. What was the net cash provided by (used in) investing activities for the year?

A. ($67)

B. ($17)

C. $67

D. $17

13. Tani Corporation's most recent balance sheet appears below:

Comparative Balance Sheet

Assets Ending Balance Beginning Balance

Current Assets

Cash and cash equivalents. $52 $40

Accounts receivable.. 37 32

Inventory. 57 63

Total Current Assets.146 135

Property, plant and equipment.515 470

Less Accumulated depreciation...312 270

Net property, plant and equipment..203 200

Total Assets$ 349 $ 335

Liabilities and stockholders equity

Current Liabilities:

Accounts Payable..$54 $46

Total current liabilities 54 46

Bonds Payable.. 60 70

Total Liabilities.114 116

Stockholders equity:

Common Stock52 50

Retained earnings.183 169

Total Stockholders equity..235 219

Total liabilities and stockholders equity. $349 $335

The company's net income for the year was $18 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $4. What was the net cash provided by (used in) investing activities for the year?

A. ($3)

B. ($45)

C. $45

D. $3

14. Schoultz Corporation has provided the following data concerning an investment project that it is considering:

Initial investment.. $700,000

Annual cash flow.. $266,000 per year

The life of the project is 4 years. The company's discount rate is 12%. What is the net present value of the project closest to?

A. $700,000

B. $808,108

C. $108,108

D. $364,000

15. Spomer Corporation's inventory at the end of Year 2 was $114,000 and its inventory at the end of Year 1 was $120,000. Cost of goods sold amounted to $710,000 in Year 2. What is the company's inventory turnover for Year 2 closest to?

A. 5.92

B. 1.05

C. 6.07

D. 6.23

16. Sales reported on the income statement totaled $750,000. The beginning balance in accounts receivable was $70,000. The ending balance in accounts receivable was $80,000. Under the direct method of determining the net cash provided by operating activities on the statement of cash flows, sales adjusted to a cash basis are how much?

A. $830,000

B. $680,000

C. $760,000

D. $740,000

17. Mormino Corporation's income statement appears below:

Income Statement

Sales (all on account).. $1,240,000

Cost of goods sold. 730,000

Gross Margin. 510,000

Operating Expenses. 450,462

Net operating income 59,538

Interest expense 18,000

Net income before taxes. 41,538

Income taxes (35%). 14,538

Net income $27,000

What percentage is the company's gross margin percentage closest to?

A. 41.1%

B. 69.9%

C. 1888.9%

D. 5.3%

18. A company anticipates incremental net income (i.e., incremental taxable income) of $50,000 in year 4 of a project. The company's tax rate is 30% and its after-tax discount rate is 12%. How much is the present value of this future cash flow closest to?

A. $9,533

B. $22,260

C. $35,000

D. $15,000

19. (Ignore income taxes in this problem.) Wombles Corporation is contemplating purchasing equipment that would increase sales revenues by $478,000 per year and cash operating expenses by $249,000 per year. The equipment would cost $738,000 and have a 9 year life with no salvage value. The annual depreciation would be $82,000. What percent is the simple rate of return on the investment closest to?

A. 11.1%

B. 31.0%

C. 30.8%

D. 19.9%

20. Correl Corporation has provided the following data concerning an investment project that it is considering:

Initial investment.. $190,000

Annual cash flow $75,000 per year

Salvage value at the end of the project. $25,000

The life of the project is 4 years. The company's discount rate is 15%. What is the net present value of the project closest to?

A. $24,200

B. $135,000

C. $38,500

D. $228,500