21. If the both the demand and supply for loanable funds increase at the same time, then __________.

		interest rates can only remain unchanged
		interest rates can only decrease
		interest rates can increase, decrease, or remain the same
		interest rates can only increase

22. Which of the following business owners are protected by limited liability?

		a stockholder
		none of the above
		a sole proprietor
		a general partner

23. Which of the following forms of business is "double taxed", once on their profits and once again on their dividends?

		a sole proprietorship
		a limited liability company (LLC)
		a regular corporation
		a general partnership

24. Terri Garner will invest $3,000 in an IRA account for the next 30 years starting at the end of this year. The investment will earn 13 percent annually. How much money will Terri have in the account at the end of 30 years?

25. Cyclone Golf Resorts is developing a new golf course at a cost of $2,744,320. It expects the new golf course to generate cash flows of $1,223,445, $2,007,812, and $3,147,890 over the next three years. If the cost of capital is 13 percent, what is the IRR of this project?

26. Which of the following investment classes had the greatest average return based on recent historical data?

		Small US stocks
		Large US stocks
		Short-term government bonds
		Long-term government bonds

27. A higher discount rate will __________.

		increase the present value of a future cash flow
		not affect the present value of a future cash flow
		decrease the future value of a future cash flow
		decrease the present value of a future cash flow

28. Giant Aluminum Corporation will pay dividends of $4.75, $5.25, $5.75, and $7.00 for the next four years. Thereafter, the company expects the dividend growth rate to be a constant 7 percent. if the required rate of return in 15 percent, what is the current price of the stock?

29. Crazee Enterprises Corporation just paid a dividend and it expects that dividend to grow by 10 percent for the next three years. After that, the dividend is expected to grow at a constant rate of 5 percent in perpetuity. If the company's stock is currently selling for $72 per share and the required return is 10 percent, what is the amount of the NEXT dividend, i.e., D1?

30. Provo, Inc., had cash revenues of $10,000,000, cash operating expenses of $5,000,000, and depreciation and amortization of $1,000,000 during 2014. The firm purchased $500,000 of equipment during the year while increasing its inventory by $300,000 (with no corresponding increase in current liabilities). The marginal tax rate for Provo is 40 percent. What is Provo's free cash flow for 2014?

31. The yield to maturity of a bond is the discount rate that makes the present value of the coupon and principal payments __________.

		greater than the price of the bond
		less than the price of the bond
		equal to zero
		equal to the price of the bond

32. Teakap, Inc. has current assets of 1,456,312 and total assets of 4,671,602 for the year ending on December 31, 2014. It also has current liabilities of 1,029,895, common equity of 1,104,500, and retained earnings of 1,201,434. How much long-term debt does the firm have?

33. Which of the following should NOT be included in a project's cash flow calculations?

		cash expenses
		cash revenues
		allocated expenses
		change in net working capital

34. Which of the following statements is true?

		The shorter the time period that funds are invested, the greater the future value, so long as the interest rate is positive.
		The higher the interest rate, the higher the present value, so long as the interest rate is positive.
		The lower the discount rate that funds are invested at, the greater the future value.
		The longer the time period that funds are invested, the greater the future value, so long as the interest rate is positive.

35. If a bond's coupon rate is equal to the market rate, the the bond will sell __________.

		at a price greater than its face value
		at a price equal to its face value
		at a price equal to the number of payments remaining
		at a price less than its face value

36. Which of the following does not change a firm's current ratio?

		The firm borrows cash in the form of long-term debt.
		The firm pays accounts payable with cash.
		The firm collects cash for its accounts receivable.
		The firm buys inventory using a short-term loan.

37. Winslow Homey did an excellent job saving for retirement. He was able to save $500,000 in an account that pays 5 percent per annum. His plan was to withdraw his money in 20 equal installments at the end of each year in retirement, which he did for 5 years. However, poor Mr. Homey died exactly 5 years after he retired before receiving the remaining payments he was due. How much money was left in Mr. Homeys account on the day he died?

38. The internal rate of return (IRR) is __________.

		the discount rate that makes the NPV less than zero
		the discount rate that makes the bond value positive (for premium bonds)
		the discount rate that makes the NPV greater than zero
		the discount rate that makes the NPV equal to zero