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A project expects gross annual cash inflow of $1,000 but incurring related annual expenses of $200. The initial investment for the project is $1,700. The assumed discount rate is 4% and the life of the project is 7 years. What is the net present value (NPV) of the project?

Select one:

a.$3,101.68

b.$4,618.64

c.$7,140

d.$11,525

Question2

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True or False: The following is short-term way to hold cash until it is needed: Interest bearing demand deposit accounts (DDA)

Select one:

True

False

Question3

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True or False: The following is an internal risk: Procedures and processes

Select one:

True

False

Question4

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The following companies released their financial reports:

Of the above companies:

Select one:

a.Company Abel has the highest PE Ratio

b.Baker has the highest PE Ratio

c.Cruz has the highest PE Ratio

Question5

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The accounts receivable and inventory turnover rates remain the same. However a company negotiates with its major supplier of inventory to allow an extra 15 days in which to pay with no finance charge and with no loss of price discount.

Select one:

a.The company will realize a more efficient cash conversion

b.The company will experience no change in an efficient cash conversion

c.The company will have to wait an extra 15 days to collect on its accounts receivable

d.The company will have to wait more than 15 days to collect on its accounts receivable

Question6

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True or False: The following is short-term way to hold cash until it is needed: Municipal bonds

Select one:

True

False

Question7

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True or False: The following is short-term way to hold cash until it is needed: Corporate debentures.

Select one:

True

False

Question8

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A company's inventory turnover, as measured in days, increases. This means the rate in which the company moves the inventory items it has in stock is becoming more rapid.

Select one:

True

False

Question9

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Company Abel has total sales of $364,500, of which, $60,500 represent cash sales. Its annual average accounts receivable balance is $74,400. Company Baker has total sales of $367,450, of which, $63,475 represent cash sales. Its annual average accounts receivable balance is $54,500. Which company has the favorable accounts receivable turnover experience?

Select one:

a.Abel

b.Baker

Question10

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True or False: The following is an internal risk: Political climate

Select one:

True

False

Question11

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True or False: The following is short-term way to hold cash until it is needed: Money market funds

Select one:

True

False

Question12

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True or False: The following is short-term way to hold cash until it is needed: US Treasury Bills

Select one:

True

False

Question13

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True or False: The following is short-term way to hold cash until it is needed: Certificate of deposit of 6 months

Select one:

True

False

Question14

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The following account values are from Baker Company's balance sheet:

Cash $12,500 Accounts Receivable $54,500 Inventory $96,000 Equipment $150,000 Buildings $250,000 Short-term Liabilities $70,400 Long-term Liabilities $210,000 What is Baker's quick ratio?

Select one:

a.0.83

b.0.88

c.0.95

d.2.50

Question15

True or False: The following is short-term way to hold cash until it is needed: Common stock

Select one:

True

False

Question16

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An investor pays $3,000 for a $10,000 corporate (junk) bond with an 8% coupon (interest rate). What is the bondholder's yield?

Select one:

a.3.00%

b.8.00%

c.8.75%

d.26.67%

Question17

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Company MNO has common stock with a market value of $9.15 and an annual dividend of $0.55. Company PQR has common stock with a market value of $8.10 and an annual dividend of $0.10. As an investor, which company has the favorable yield?

Select one:

a.MNO

b.PQR

Question18

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From the following types of risks:

A. Capital investment and/or shareholder requirement

B. Liquidity

C. Credit

D. Price

E. Business operations.

Of the above risks, the following are Financial/Reporting risks:

Select one:

a.A, B, and C

b.A,D, and E

c.C, D, and E

d.B, C, and D

Question19

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The following account values are from Baker Company's balance sheet: Cash $12,500 Accounts Receivable $54,500 Inventory $96,000 Equipment $150,000 Buildings $250,000 Short-term Liabilities $70,400 Long-term Liabilities $210,000

What is Baker's current ratio?

Select one:

a.0.83

b.2.05

c.2.32

d.4.63

Question20

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True or False: The following is an internal risk: Capacity

Select one:

True

False

Question21

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True or False: The following is an internal risk: Fluctuations in demand

Select one:

True

False

Question22

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A company's inventory turnover, as measured in days, decreases. This means the rate in which the company moves the inventory items it has in stock is becoming more rapid.

Select one:

True

False

Question23

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True or False: The following is an internal risk: Systems and technology

Select one:

True

False

Question24

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True or False: The following is short-term way to hold cash until it is needed: Preferred stock

Select one:

True

False

Question25

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True or False: The following is short-term way to hold cash until it is needed: Corporate bond

Select one:

True

False

Question26

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True or False: The following is short-term way to hold cash until it is needed: US Treasury Notes of 10 year duration

Select one:

True

False

Question27

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True or False: The following is an internal risk: Economic conditions

Select one:

True

False

Question28

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Common stock with a current market value of $19.25 per share issues a quarterly dividend of $0.25. What is its current annual dividend yield?

Select one:

a.1.30%

b.2.13%

c.3.53%

d.5.19%

Question29

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Company Abel has total sales of $364,500, of which, $60,500 represent cash sales. Its annual average accounts receivable balance is $74,400. What is its accounts receivable turnover in terms of days?

Select one:

a.5 days

b.65 days

c.89 days

d.96 days

Question30

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During the year 2011, DEF Company's capital structure consisted solely of common stock. It was determined that the cost of maintaining that capital was 6%. In 2012, DEF decided to issue bonds. The company's new capital structure is 2/3 common stock and 1/3 bonds. The cost of capital for the common stock remains unchanged and the cost of maintaining the bonds is 8%.

Select one:

a.The weighted average cost of capital (WACC) for the company increased from year 2011 to year 2012

b.The weighted average cost of capital (WACC) for the company decreased from year 2011 to year 2012

c.The weighted average cost of capital (WACC) for the company remained the same from year 2011 to year 2012

Question31

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True or False: The following is an internal risk: Social, legal, or regulatory trends

Select one:

True

False

Question32

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A company's accounts receivable turnover rate (its rate, not days) increases. The company can expect to receive cash for its credit sales earlier than expected.

Select one:

True

False

Question33

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A company's accounts receivable turnover rate (its rate, not days) decreases. The company can expect to receive cash for its credit sales earlier than expected.

Select one:

True

False

Question34

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The Delta Company has issued a total of 75,000,000 shares of common stock at par (its value to the firm is $75,000,000. The dividend yield is 7%. The company also has $25,000,000 of bonds (also sold at par) with a coupon rate of 6%. The tax rate for Alpha is 30%. What is its weighted average cost of capital (WACC)?

Select one:

a.3.75%

b.6.00%

c.6.30%

d.7.00%

Question35

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True or False: The following is short-term way to hold cash until it is needed: Commercial paper

Select one:

True

False

Question36

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The following companies released their financial reports:

Of the above companies:

Select one:

a.Company Abel has the most favorable EPS

b.Baker has the most favorable EPS

c.Cruz has the most favorable EPS

Question37

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From the following types of risks:

A. Damage to reputation B. Information technology (IT) C. Credit D. Competition E. Capital investment and/or shareholder requirements.

Of the above risks, the following are Strategic Risks:

Select one:

a.B, D, and E

b.A,D, and E

c.B, C, and D

d.A, B, C, D, and E

Question38

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Company Baker has total sales of $367,450, of which, $63,475 represent cash sales. Its annual average accounts receivable balance is $54,500. What is its accounts receivable turnover in terms of days?

Select one:

a.5 days

b.65 days

c.89 days

d.96 days

Question39

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A decision that would allocate a portion of a risk across different subsidiaries in different countries would be a risk response best described as:

Select one:

a.Mitigation

b.Avoidance

c.Risk transfer

d.Risk sharing

Question40

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A company has total current assets of $300,000 and total long term assets of 500,000. Total current liabilities equal $150,000 and total long-term liabilities are $100,000. The company has 100,000 shares of $1 par common stock outstanding. The common stock has a market value of $25 per share. What is the company's market capitalization?

Select one:

a.$50,000

b.$550,000

c.$100,000

d.$2,500,000