2. The cost of debt capital to a business is measured by (a.) the maturity date (b.) the interest rate (c.) the amount borrowed (d.) the cost of equity (e.) none of the above

3. What is the value of a 10 percent annual coupon, $1,000 par value bond with 20 years to maturity if the required rate of return on the bond is 12 percent? (a.) $1,236.48 (b.) $925.42 (c.) $850.61 (d.) $798.79 (e.) $737.55

4. Which of the following statements about common stock is incorrect? (a.) The preemptive right gives current stockholders the right to purchase any new shares issued by the company. (b.) Stockholders exercise control over the company by voting for board members. (c.) Common stockholders are the owners of for-profit corporations. (d.) The claim of shareholders on the cash flows of the firm is limited to the dividends they receive (i.e., they have no claim on a business's residual earnings). (e.) In the event of bankruptcy and liquidation, shareholders often receive none of the proceeds.

9. Which of the following statements is most correct? (a.) Equity generated by retained earnings is costless. (b.) For-profit firms always should retain the full amount of net income and reinvest it in the business. (c.) For-profit firms always should pay out the full amount of net income as dividends. (d.) For-profit firms should distribute net income through dividends if they cannot earn as much as stockholders could in similar risk investments. (e.) None of the above statements is correct.

10. Which of the following statements about capital investment analysis is most correct? (a.) Although a useful accounting concept, breakeven analysis has no role in capital investment analysis. (b). Net present value (NPV) measures a projects rate of return, whereas internal rate of return (IRR) measures a projects dollar return. (c). An NPV of zero indicates that the project is expected to return the amount of the initial investment, but it will not provide a return on that investment. (d). On most projects, the NPV and IRR measures will give conflicting results, so managers must use judgment as to which measure to use. (e). Payback measures the length of time it takes to recover the initial investment in the project.

11.Suppose a project having a cost of capital of 10 percent has an internal rate of return (IRR) of 15 percent. What is the projects modified IRR (MIRR)?

15. What type of risk is most relevant for projects being evaluated by investor-owned businesses? (a). Stand-alone risk (b). Corporate risk (c.) Market risk (d.) Answers (a) and (c) are correct (e.) Answers (a), (b), and (c) are correct

17. Which of the following activities fall(s) under supply chain management? a. Procurement of supplies b. Storage of supplies c. Preservice insurance verification to determine coverage for supplies used in patient care d. Answers (a) and (b) e. Answers (a), (b), and (c)

18. Which of the following is not a type of short-term financing? (a.) Trade credit (b.) Domestic stock c. Accounts receivable financing (d.) Line of credit (e.) Accruals

19. MedSupplies Plus currently sells surgical supplies to its customers on credit terms of 3/10 net 30. If MedSupplies Plus changes its credit terms to 4/10 net 30, which of the following is true? (a). The periodic interest rate increases. (b.) The approximate annual cost of trade credit decreases. (c.) The net price of supplies increases. (d.) The discount period decreases. (e.) The amount of available free trade credit falls to zero.

26. Investor-owned corporations are limited by law to issuing only one type of common stock. a. True b. False

27. Managers considering alternative investments always should accept the alternative with the highest expected return. a. True b. False