1. To build a new factory in San Diego which costs $20 million dollars, your company decided to issue $14 million value of new bonds and $6 million value of new stock. This decision is an example of a;

long-term investment decision

capital structure decision

short-term investment decision

capital budgeting decision

daily operating decision

2. Choose one that correctly states

Trademarks and patents are highly liquid

For a decision making, market value is more important than book value

To be a healthy company, equity should be more than debt

Liabilities are a residual claim against a companys asset

Average tax rate is the portion of total tax payment out of total revenue

3. Suppose your companys ROA is 11% and ROE is also 11%, then, your company:

also has a current ratio of 10

has no debt of any kind

has no net working capital

is using its assets as efficiently as possible

has an equity multiplier of 2

4.

Your companys long-term debt at the beginning of the year is $250 and total debt is $340. At the end of the year, long-term debt is $280 and total debt is $350. The interest paid is $30. What is the amount of the cash flow to creditors?

$70

$0

$30

-$30

$60

5. Your companys long-term debt at the beginning of the year is $250 and total debt is $340. At the end of the year, long-term debt is $280 and total debt is $350. The interest paid is $30. What is the amount of the cash flow to creditors?

$70

$0

$30

-$30

$60