QUESTION 1 A corporation reports the following year-end balance sheet data. The company's working capital equals: $ 40,000 Current liabilities 55,000 Long-term liabilities 60,000 Common stock 145,000 Retained earnings $ 300,000 Total liabilities and equity $ 75,000 35,000 100.000 90,000 $ 300,000 Cash Accounts receivable Inventory Equipment Total assets $80,000 - $190,000 O $155,000 O $75,000 O $300,000 QUESTION 2 Coffer Co. is analyzing two projects for the future. Assume that only one project can be selected. Project X Project Y Cost of machine $ 77,000 $55,000 Net cash flow Year 1 28,000 2,000 Year 2 28,000 25,000 Year 3 28,000 25,000 Year 4 0 |20,000 If the company is using the payback period method and it requires a payback of three years or less, which project should be selected? O Project Y O Project Y because it has a lower initial investment Project X Both X and Y are acceptable projects. O Neither X nor Y is an acceptable project QUESTION 4 Butler Corporation is considering the purchase of new equipment costing $30,000. The projected annual after-tax net income from the equipment is $1,200, after deducting $10,000 for depreciation. The revenue is to be received at the end each year. The machine has a useful life of 3 years and no salvage value. Butler requires a 12% return on its investments. The present value of an annuity of $1 for different periods follows: Perods 12% 1 0.8929 2 1.6901 3 24018 4 3.0373 What is the net present value of the machine? O $30,000 O $26,900 O S(3,100) O $(29,520) O $24.018 QUESTION 5 A company had a market price of $27.50 per share, earnings per share of $1.25, and dividends per share of $0.40. Its price-earnings ratio equals: O 3.3 O 320 220 0 3.1 O 93.8 QUESTION 6 In preparing a company's statement of cash flows for the year just ended, the following information is available: Loss on the sale of equipment Purchase of equipment Proceeds from the sale of equipment Repayment of outstanding bonds Purchase of treasury stock Issuance of common stock Purchase of land Increase in accounts receivable during the year Decrease in accounts payable during the year Payment of cash dividends Net cash flows from financing activities for the year were: $340,000 of net cash used. $147,000 of net cash used. $51,000 of net cash used. $347,000 of net cash used. $26,000 of net cash used. $ 14,000 225,000 106,000 87,000 25,000 96,000 115,000 33,000 75,000 35,000