True Essay Example
Apple Two Enterprises expects to generate sales of $5,950,000 for fiscal 2014; sales were$3,450,000 in fiscal 2013. Assume the following figures for the fiscal year ending 2013: cash $70,000; accounts receivable $250,000; inventory $400,000; net fixed assets $520,000; accounts payable $235,000; and accruals $155,000. Use the percent-of-sales method to forecast cash for the fiscal year ending 2014.
$120,725
Explanation: 3450000 / 70000 = 0.0203 x 5950000 = 120,725
Metals Corp. has $2,575,000 of debt, $550,000 of preferred stock, and $18,125,000 of common equity. Metals Corp.'s after-tax cost of debt is 5.25%, preferred stock has a cost of 6.35%, and newly issued common stock has a cost of 14.05%. What is Metals Corp.'s weighted average cost of capital?
12.78%
Project Sigma requires an investment of $1 million and has a NPV of $10. Project Delta requires an investment of $500,000 and has a NPV of $150,000. The projects involve unrelated new product lines. What is your evaluation
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
$120,725
Explanation: 3450000 / 70000 = 0.0203 x 5950000 = 120,725
Metals Corp. has $2,575,000 of debt, $550,000 of preferred stock, and $18,125,000 of common equity. Metals Corp.'s after-tax cost of debt is 5.25%, preferred stock has a cost of 6.35%, and newly issued common stock has a cost of 14.05%. What is Metals Corp.'s weighted average cost of capital?
12.78%
Project Sigma requires an investment of $1 million and has a NPV of $10. Project Delta requires an investment of $500,000 and has a NPV of $150,000. The projects involve unrelated new product lines. What is your evaluation
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