5. Apply the % sales method of forecasting and assuming your business is operating at full capacity and you would like to expand your business, then: a. All operating long term, current and fixed assets will vary proportionately with changes in sale b. This means that you must invest in all fixed assets and all current and long-term liabilities c. This is Implying that we must retained more of the net income. d. all of the above is correct when attempting to expand the business e. none of the above is true when expanding the business

6. Assuming your business is operating at full capacity and you would like to expand your business then: a. All operating assets that is, current and fixed assets will vary proportionately with changes in sale b. implying that we must invest in all assets and all current liabilities c. Implying that we must retained more of the net income d. all of the above is correct when attempting to expand the business

7. What is the relationship between present value and future value interest factors? a. From a valuation perspective, the present value and future value factors are equal to each other b. The present value factor is the exponent of the future value factor. c. The factors are reciprocals of each other. d. Both a and c are true above e. There is no relationship between these two factors.

8. Here is a list of some business and financial liabilities to a business undertaking cellphone payments, insurance payments real estate rentals, Health insurance payments lease payments a. all of the above on the list are ordinary annuity instruments b. all of the above on the list are annuity due instruments c. all of the instruments on the above list are lump sum payments d. all of the above on the list are collateralize instruments

9. Which of the following is/are considered and outflow of cash to the business 1. Issuance of securities, that is stocks and bonds 2. Payment of cash dividends 3. The Proceeds of an additional loan 4. Payment of Federal, state, and local taxes a. 1 only b. 2 and 4 only c. 1 and 4 only d. 1, 2, and 4 only

10. Which one of the following policies most directly affects the projection of the retained earnings balance to be used on a pro forma statement? a. Net working capital policy b. Capital structure policy c. Dividend policy d. Capacity utilization policy

11. This is a question that seeks a demonstration of evaluative skills in the TVM principle. Andy deposited $3,000 this morning into an account that pays 5 percent interest, compounded annually. Barbara also deposited $3,000 this morning into an account that pays 5 percent interest, compounded annually. Andy will withdraw his interest earnings and spend it as soon as possible. Barbara will reinvest her interest earnings into her account. Given this, which one of the following statements is true?

a. Barbara will earn more interest the first year than Andy will. b. Andy will earn more interest in year three than Barbara will c. After five years, Andy and Barbara will both have earned the same amount of interest. d. Barbara will earn more interest in the second year than Andy

12. Recall the so-called Einstein's assertion about the power of compounding in investments and from the graded Week 6 assignment and the discussion that followed in Week 7 which of the following would be most appropriate: a. The lapse of time was most crucial in proving that the Einstein assertion is valid b. The lapse of time was not a major determinant given that compound interest will always produce a higher future value c. the future value of a financial asset, whether compounding or non-compounding, is positively correlated with higher rates on the given financial assets d. both a and c above were most appropriate