Fin 370 Final Exam V 4
1. The goal of the firm should be
b/ maximization of shareholder wealth
2. An example of a primary market transaction is
a. a new issue of common stock by AT&T
3. According to the agency problem, _________ represent the principals of a corporation.
b/ Managers
c/ Managers
4. Which of the following is a principle of basic financial management?
a. Risk/return tradeoff
5. Another name for the acid test ratio is the
b/ quick ratio
6. The accounting rate of return on stockholders’ investments is measured by
c/ operating income return on investment
7. If you are an investor, which of the following would you prefer?
b/ Earnings on funds invested compound daily
8. The primary purpose of a cash budget is to
c/ provide a detailed plan of future cash flows
9. Which of the following is a non-cash expense?
a. Depreciation expenses
10. The break-even model enables the manager of a firm to
c/ determine the quantity of output that must be sold to cover all operating costs
11. A zero-coupon bond
d/ is sold at a deep discount at less than the par value
Actually this could be a and d
12. If you have $20,000 in an account earning 8% annually, what constant amount could you withdraw each year and have nothing remaining at the end of 5 years?
b/ $5,008.76
20000/(1-(1/(1+8%)^5))/8%
13. At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?
a. 6%
716.40/400^(1/10)-1
14. The present value of a single future sum
d/ depends upon the number of discount periods
15. Which of the following is considered to be a spontaneous source of financing?
d/ Accounts payable
16. Compute the payback period for a project with the following cash flows, if the company’s discount rate is 12%.
Initial outlay =
b/ maximization of shareholder wealth
2. An example of a primary market transaction is
a. a new issue of common stock by AT&T
3. According to the agency problem, _________ represent the principals of a corporation.
b/ Managers
c/ Managers
4. Which of the following is a principle of basic financial management?
a. Risk/return tradeoff
5. Another name for the acid test ratio is the
b/ quick ratio
6. The accounting rate of return on stockholders’ investments is measured by
c/ operating income return on investment
7. If you are an investor, which of the following would you prefer?
b/ Earnings on funds invested compound daily
8. The primary purpose of a cash budget is to
c/ provide a detailed plan of future cash flows
9. Which of the following is a non-cash expense?
a. Depreciation expenses
10. The break-even model enables the manager of a firm to
c/ determine the quantity of output that must be sold to cover all operating costs
11. A zero-coupon bond
d/ is sold at a deep discount at less than the par value
Actually this could be a and d
12. If you have $20,000 in an account earning 8% annually, what constant amount could you withdraw each year and have nothing remaining at the end of 5 years?
b/ $5,008.76
20000/(1-(1/(1+8%)^5))/8%
13. At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?
a. 6%
716.40/400^(1/10)-1
14. The present value of a single future sum
d/ depends upon the number of discount periods
15. Which of the following is considered to be a spontaneous source of financing?
d/ Accounts payable
16. Compute the payback period for a project with the following cash flows, if the company’s discount rate is 12%.
Initial outlay =