Finance quessssssssss.

1. Which of the following factors could explain why last year Cleaver Energy had negative net cash flow, but the cash on its balance sheet increased?

A. The company paid a large dividend.

B. The company had high amortization expenses.

C. The company repurchased 20% of its common stock.

D. The company sold a new issue of bonds.

E. The company made a large investment in new plant and equipment.

2. Other things held constant, which of the following actions would increase the amount of cash on a company's balance sheet?

A. The company issues new common stock. B. The company repurchases common stock.

C. The company pays a dividend.

D. The company purchases a new piece of equipment.

E. The company gives customers more time to pay their bills.

3. It is now January 1, 2005. Tom and Jerry are cousins who were both born on January 1, 1975. Both turned 30 today. Their grandfather gave Tom $4,000 on his 25th birthday, January 1, 2000, putting the funds into a trust that will be paid to Tom on his 70th birthday, January 1, 2045. Each year since 2000, the grandfather put an additional $4,000 in the account on Tom's birthday, and the grandfather's own trustee will continue making the $4,000 payments until January 1, 2045, when a 46th and final $4,000 contribution will be made on Tom's 70th birthday. The grandfather wants Tom to work, not be a "trust fund baby," but he also wants to insure that Tom is well provided for in his old age.

The grandfather has until now has been disappointed with Jerry, hence has not given him anything, but they recently reconciled, and the grandfather has decided to make an equivalent provision for Jerry. He will make the first payment to a trust for Jerry today, and he has instructed his trustee to make additional annual payments each year until January 1, 2045, when the 41st and final payment will be made. If both trusts earn an annual return of 10%, how much must the grandfather put into Jerry's trust to enable him to receive the same amount as Tom on January 1, 2045, when they reach age 70?

A. $5,976

B. $6,492

C. $6,110

D. $7,513

E. $8,349

4. Your father is about to retire, and he wants to buy an annuity that will provide him with $50,000 of income a year for 20 years, with the first payment coming immediately. The going rate on such annuities is 6%. How much would it cost him to buy the annuity today? A. $488,349.15

B. $416,110.34

C. $607,905.82

D. $615,976.84

E. $517,513.68

5. Suppose a U.S. government bond will pay $1,000 three years from now. If the going interest rate on 3-year government bonds is 4%, how much is the bond worth today?

A. $943.46

B. $907.91

C. $991.43

D. $889.00

E. $968.40

6. A corporate bond currently yields 8.5%. Municipal bonds with the same risk, maturity, and liquidity currently yield 5.5%. At what tax rate would investors be indifferent between the two bonds?

A. 35.29%

B. 30.04%

C. 40.00%

D. 64.71%

E. 24.67%

7. Which of the following securities has the largest present value? Assume in all cases that the annual interest rate is 8% and that there are no taxes.

A. A five-year ordinary annuity that pays you $1,000 each year.

B. A five-year zero coupon bond that has a face value of $7,000.

C. A preferred stock issue that pays an $800 annual dividend in perpetuity. (Assume that the first dividend is received one year from today.)

D. A seven-year zero coupon bond that has a face value of $8,500.

E. A security that pays you $1,000 at the end of 1 year, $2,000 at the end of 2 years, and $3,000 at the end of 3 years.

8. At the beginning of the year, Gonzales Corporation had $100,000 in cash. During the year, the company undertook a major expansion. From the statement of cash flows, operating activities generated $300,000 of cash, while investing activities required cash expenditures of $800,000. At the end of the year, the company's cash position was $50,000. What was the net cash provided by the company's financing activities?

A. $350,000 B. $400,000 C. $300,000 D. $450,000 E. $500,000

9. Lennox Furniture Company's 2005 balance sheet showed total current assets of $1,500,000. All of the current assets were required in operations, and its current liabilities consisted of $300,000 of accounts payable, $200,000 of 6% short-term notes payable to the bank, and $100,000 of accrued wages and taxes. What was the net operating working capital that was financed by investors at the end of 2005?

A. $1,400,000 B. $1,100,000 C. $1,500,000 D. $1,200,000 E. $1,300,000

10. You are saving money so that you can purchase a house in five years. You plan to contribute six payments of $3,000 a year. The first payment will be made today (t 0) and the final payment will be made five years from now (t 5). If you earn 11% in your investment account, how much money will you have in the account five years from now (at t 5)?

A. $19,412

B. $23,739

C. $26,350

D. $21,683

E. $20,856

11. Madison Metals recently reported $9,000 of sales, $6,000 of operating costs other than depreciation, and $1,500 of depreciation. The company had no amortization charges and no non-operating income. It had issued $4,000 of bonds that carry a 7% interest rate, and its federal-plus-state income tax rate was 40%. What was the firm's taxable, or pre-tax, income? A. $1,220 B. $1,180 C. $1,340 D. $1,260 E. $1,300

12. Alumbat Corporation has $800,000 of debt outstanding, on which it pays 10% annual interest. Alumbat's annual sales are $3,200,000, its average tax rate is 40%, and its net profit margin is 6%. The company must maintain a TIE ratio of at least 4 times or its bank will refuse to renew its loan, resulting in bankruptcy. What is Alumbat's current TIE ratio? A. 5.0 B. 3.6 C. 3.4 D. 4.0 E. 2.4

13. A start-up firm is making an initial investment in new plant and equipment. Assume that currently its equipment must be depreciated on a straight-line basis over 10 years, but Congress is considering legislation that would require the firm to depreciate the equipment over 7 years. If the legislation becomes law, which of the following would occur in the year following the change?

A. The firm's reported net income would increase.

B. The firm's tax payments would increase.

C. The firm's taxable income would increase.

D. The firm's net cash flow would increase.

E. The firm's operating income (EBIT) would increase.

14. A bank recently loaned you $15,000 to buy a car. The loan is for five years (60 months) and is fully amortized. The nominal rate on the loan is 12%, and payments are made at the end of each month. What will be the remaining balance on the loan after you make the 30th payment? A. $ 7,599.03 B. $14,515.50 C. $ 8,363.62 D. $ 8,637.38 E. $ 8,611.17

15. Your sister turned 30 today, and she is planning to save $3,000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund, which she expects to provide a return of 10% per year. She plans to retire 35 years from today, when she turns 65, and she expects to live for 30 years after retirement, to age 95. Under these assumptions, how much can she spend in each year after she retires? Her first withdrawal will be made at the end of her first retirement year.

A. $83,049

B. $91,110

C. $86,250

D. $78,976

E. $88,513