# Answer of Multiple Choice Quiz

August 22, 2017

**Answer of Multiple Choice Quiz in $39 Only**

1. As the required rate of return is increased, the:

PV decreases, FV decreases

PV decreases, FV increases

PV increases, FV decreases

PV increases, FV increases

2. Consider an 8-year loan with annual payments at 10%. If the loan amount is $250,000, compute the interest paid during the fifth year.

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

3. Which one of the following transactions occurred in the primary market?

Janice gifted 50 shares of Google stock to her daughter-in-law on her birthday.

Microsoft, Inc offered newly issued shares to the general public.

Joanne instructs her broker to sell all of her shares in General Motors, Inc.

Valery purchased 100 shares of Dell stock from his best friend, Tom.

The president of AIG Group, Inc. sold some of his shares to his daughter on the NYSE.

Question 4 A sole proprietor:

can generally raise unlimited equity to finance his or her business activities.

earns income which is subject to double taxation.

incurs significant legal costs to form his or her business entity.

assumes personal liability for all of the debts of the business.

creates a business entity with an unlimited life.

Question 5 ABC Company has $50,000 in current assets and $50,000 in current liabilities. This is referred to as the company’s:

asset allocation.

capital budget.

capital structure.

working capital.

cash equivalents.

Question 6 The ABC Company has a net profit margin of 7.54 percent on sales of $287,173. The company has 16,819 shares of stock outstanding at a market price of $12.9 per share. What is the price-earnings ratio?

Enter your answer rounded off to two decimal points.

Question 7 ABC Company has net income of $98,134, return on assets of 8.64 percent, and debt-equity ratio of 0.54. What is the return on equity?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Question 8 ABC Inc. has sales of $250,854, costs of $144,747, depreciation expense of $21,426, and interest paid of $30,329. The tax rate is 27 percent. How much net income did the firm earn for the period?

Enter your answer in dollars rounded off to two decimal points. Do not enter $ or comma in the answer box.

Question 9

What is the net present value of the following cash flows? Assume an interest rate of 9.69%

Year CF

0 -$12,155

1 $6,952

2 $6,726

3 $7,639

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answers box.

Question 10 The primary goal of corporate financial management is to maximize the:

total revenue of the firm.

number of shares of common stock outstanding.

market value of the existing stock.

current net income of the firm.

market share for the firm.

Question 11 A firm has net working capital of $2,174and current assets of $4,370. What is the current ratio?

Enter your answer rounded off to two decimal points.

Question 12 ABC Company offers a perpetuity which pays annual payments of $12,050. This contract sells for $321,056 today. What is the interest rate?

Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Question 13

Suppose an investment offers to triple your money in 27 years. What annual rate of return are you being offered if interest is compounded monthly?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Question 14 You have $15,837 you want to invest for the next 36 years. You are offered an investment plan that will pay you 14.9 percent per year for the next 5 years and 8.5 percent per year for the remaining years. How much will you have at the end of the 36 years?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.

Question 15 If you put $140 in a savings account at the beginning of each year for 15 years, how much money will be in the account at the end of the 15th year? Assume that the interest rate is 14.

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question 16 In its most recent financial statements, ABC reported $67,188 million of net income and $552,787 million of retained earnings. The previous retained earnings were 505,415 million. How much in dividends was paid to shareholders during the year?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question 17 ABC, Inc. has total equity of $381,856, long-term debt of $116,400, net working capital of $1,600, and total assets of $715,272. What is the total debt ratio?

Enter your answer in percentages rounded off to two decimal points.

Question 18 You want to have $11,983 in cash to buy a car in 3 years. You expect to earn 12.8% per year on your savings. How much do you need to deposit today if this is the only money you save for this purpose?

Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.

Question 19 If you receive $4,627 at the end of each year for the first three years and $6,273 at the end of each year for the next two years. What is the future value of this cash flow stream? Assume interest rate is 4%.

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question 20 ABC Company has a debt-equity ratio of 1.26. What is the debt ratio?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Question 21 If you receive $367 at the end of each year for the first three years and $942 at the end of each year for the next three years. What is the present value? Assume interest rate is 4%.

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question 22 ABC Company earned $735,734 in taxable income for the year. How much tax does the company owe on this income?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

Question 23 How many years will it take to double your money at 4% compounded semi-annually?

Enter your answer rounded off to TWO decimal points.

Question 24 What is the effective rate of 9% compounded monthly?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Question 25 Dividends paid to a firm’s stockholders, both preferred and common stockholders, are tax-deductible to the paying company. True or False?

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