Chapter 04 Long-Term Financial Planning and Growth Multiple Choice Questions 1. Phil is working on a financial plan for the next three years. This time period is referred to as which one of the following? A. financial range B. planning horizon C. planning agenda D. short-run E. current financing period 2. Atlas Industries combines the smaller investment proposals from each operational unit into a single project for planning purposes. This process is referred to as which one
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Problem 1 A stock sells for $10 per share. You purchase 100 shares for $10 a share (i.e.‚ for $1000)‚ and after a year the price rises to $17.50. What will be the percentage return on your investment if you bought the stock on margin and the margin requirement was (a) 25 percent‚ (b) 50 percent‚ and (c) 75 percent? (Ignore commissions‚ dividends‚ and interest expense.) Initial Stock price per share $10 # of Shares Purchased 100 New Stock price per share $17.50 Gain = New Price - Initial
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costs.) a. | 2‚596 bonds | b. | 2‚625 bonds | c. | 2‚535 bonds | d. | 2‚571 bonds | e. | 2‚496 bonds | ____ 3. Motor Homes Inc. (MHI) is presently enjoying abnormally high growth because of a surge in the demand for motor homes. The company expects earnings and dividends to grow at a rate of 20% for the next 4 years‚ after which there will be no growth (g 0) in earnings and dividends. The company’s last dividend‚ D0‚ was $1.50. MHI’s beta is 1.5‚ the market risk premium is 6%‚ and
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of the loan‚ even though intermediaries receive the flotation costs. NPV Compares the value of a dollar today to the value of that same dollar in the future‚ taking inflation and returns into account. Non-Market-Rate Financing a number of companies are fortunate enough to obtain subsidized financing from a governmental authority. The No-Tax Case βEquity = βAsset (1+ Debt/Equity) The Corporate Tax Case βEquity = (1+ (1 - t c) Debt/Equity) βUnlevered Firm Unlevered
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calculated probabilities based on new information. 19.36 Again consider the oil company case that was described in Example 19.1. Recall that the oil company wishes to decide whether to drill and that the prior probabilities of no oil‚ some oil‚ and much oil are P(none) .7‚ P(some) .2‚ and P(much) .1. Suppose that‚ instead of performing the seismic survey to obtain more information about the site‚ the oil company can perform a Cheaper magnetic experiment having two possible results: a high
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regulation‚ monopolies are illegal 3. A business that sells watches that are more inexpensive than the watches a competitor sells is using which type of competition? (0.5 points) direct and price comp 4. What is a monopoly? (0.5 points) when one company controls an entire area of goods or services 5. What is a motive? (0.5 points) a reason for doing something Lesson 3 (3.0 points) 1. What is land as a factor of production? (0.5 points) not just the surface of earth but everything that
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points) A financial resource I have right now is my job keeping three is five to six nights a week. This jobs helps pay monthly phone bill. I’m in debt with the car company because I just bought a new car to get me around. three is five to six nights a week. This jobs helps pay monthly phone bill. I’m in debt with the car company because I just bought a new car to get me around. 5. Describe a real or made up but realistic example of earned income that you or someone you know has received. What
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Part I – Perfect capital markets‚ capital structure and cost of capital (15 points) GP Corp. has common stock with a market value of $200 million and riskless debt with a value of $100 million. Investors expect a 15% return on the stock and a 6% return on the debt. Assume perfect capital markets without any taxes. a) Suppose GP issues $100 million of new stock to buy back the debt. What is the expected return of the stock after this transaction? (4 points) b) Suppose instead GP issues $50 million
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Seminar Three Exercises Due: Monday Points: 25 Do the following exercises from the textbook: Chapter 7 1. Are you considered a default risk? How would a lender evaluate you based on "the five C’s" of character capital‚ collateral‚ and conditions? How could you plan to make yourself more attractive to a lender in the future? I do not believe I would be considered a Default Risk because I have a good credit score and I try to pay off what I spend on my credit cards that same month or fairly
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it differ from just having information? 2. What is information flow? Describe each of the following directions of information flow – horizontal‚ vertical‚ incoming/outgoing. 3. Describe each of the steps presented in the slide "From Problems to Decisions...". 4. What is information literacy and what are the desirable traits of an information literate person? Lecture 4 1. What is the main advantage of using computer-based information systems over traditional manual information
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