Put on your thinking capssss...... Don't understimate

25. The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to A. Minimize the chances of losses. B. Maximize its expected total corporate income. C. Maximize the stock price on a specific target date. D. Maximize its expected EPS. E. Maximize the stock price per share over the long run, which is the stock's intrinsic value.

26. If the CEO of a firm were filling out a fitness report on a division manager (i.e., "grading" the manager), which of the following situations would be likely to cause the manager to get a BETTER GRADE? In all cases, assume that other things are held constant. A. The division's total assets turnover ratio is below the average for other firms in the industry. B. The division's debt ratio is above the average for other firms in the industry. C. The division's basic earning power ratio is above the average of other firms in the industry. D. The division's DSO (days' sales outstanding) is 40, whereas the average for competitors is 30. E. The division's inventory turnover is 6, whereas the average for competitors is 8.

27. Maple Furniture recently issued new common stock and used the proceeds to pay off some of its short-term notes payable. This action had no effect on the company's total assets or operating income. Which of the following effects would occur as a result of this action? A. The company's basic earning power ratio increased. B. The company's current ratio increased.

C. The company's times interest earned ratio decreased. D. The company's equity multiplier increased. E. The company's debt ratio increased.

28. Jill currently has $300,000 in a brokerage account that pays 10% interest. Assuming Jill makes no additional contributions to the account, how many years will it take for her to have $1,000,000 in the account? A. 16.66 years B. 12.63 years C. 23.33 years D. 33.33 years E. 3.03 years

29. If a bank pays a 6% nominal rate, with monthly compounding, on deposits, what effective annual rate does the bank pay? A. 5.91% B. 5.10% C. 6.17% D. 6.59% E. 6.71%

30. Regan Corp's sales last year were $450,000, and its year-end receivables were $45,000. On average, Regan's customers pay 10 days late (and thus they are charged a penalty). How many days of "free" credit does Regan give its customers before they are late and thus assessed a penalty? Base your answer on this equation: DSO - Average days late = Days of free credit, use a 365-day year when calculating the DSO, and round to the closest whole number. A. 25 days B. 31 days C. 23 days D. 27 days E. 29 days

31. Which of the following statements is CORRECT? A. Firms in highly competitive industries are more likely to consciously exercise "social responsibility" than are firms in oligopolistic industries. B. Corporations and partnerships have an advantage over proprietorships because a sole proprietor is exposed to unlimited liability, but the liability of all investors in the other types of businesses is more limited. C. A good goal for a firm's management is maximization of expected EPS. D. Most business in the U.S. is conducted by corporations, and corporations' popularity results primarily from their favorable tax treatment. E. One example of an agency relationship is the one between stockholders and managers.

32. You are analyzing the value of an investment by calculating the present value of its expected cash flows. Which of the following would cause the investment to look better?

A. The riskiness of the project's cash flows increases. B. The discount rate increases. C. The total amount of cash flows remains the same, but more of the cash flows are received in the later years and less are received in the earlier years. D. The cash flows are extended over a longer period of time, but the total amount of the cash flows remains the same. E. The discount rate decreases.

33. Cheers Inc. operates as a partnership. Now the partners have decided to convert the business into a corporation. Which of the following statements is CORRECT? A. Cheers' investors will be exposed to less liability, but they will find it more difficult to transfer their ownership. B. Cheers will find it more difficult to raise additional capital. C. Cheers will now be subject to fewer regulations. D. Cheers' shareholders (the ex-partners) will now be exposed to less liability. E. Assuming Cheers is profitable, less of its income will be subject to federal income taxes