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Grade Details – All QuestionsPage: 1 2Question 1. Question : Which of the follow

Grade Details – All QuestionsPage: 1 2Question 1. Question : Which of the follow

Grade Details – All QuestionsPage: 1 2Question 1. Question : Which of the following capital budgeting techniques ignores the time value of money?Question 2. Question : The ________ is the rate of return that a firm must earn on its investments in order to maintain the market value of its stock.Question 3. Question : The cost of common stock equity is ________.Student Answer:the cost of the guaranteed stated dividend expected by the stockholdersthe rate at which investors discount the expected dividends of the firm to determine its share valuethe after-tax cost of the interest obligationsthe historical cost of floating the stock issueQuestion 4. Question : A firm has an average age of inventory of 90 days, an average collection period of 40 days, and an average payment period of 30 days. The firm’s operating cycle is ________ days.Student Answer:11013012070Question 5. Question : Which of the following is true of current assets?Student Answer:The time of conversion of current assets to more liquid form is relatively unpredictable.They are used to fund long-term operations and pay long-term expenses.They are more profitable because they add more value to the product than that provided by fixed assets.They are sources of short-term financing for a firmQuestion 6. Question : At a firm’s quarterly dividend meeting held April 9, the directors declared a $0.50 per share cash dividend for the holders of record on Monday, May 1. The firm’s stock will sell ex dividends on ________.Student Answer:April 28May 5April 29April 27Question 7. Question : Generally, the order of cost, from the least expensive to the most expensive, for long-term capital of a corporation is ________.Student Answer:new common stock, retained earnings, preferred stock, long-term debtcommon stock, preferred stock, long-term debt, short-term debtpreferred stock, new common stocks, common stock, retained earningslong-term debt, preferred stock, retained earnings, new common stockQuestion 8. Question : Cash flows that could be realized from the best alternative use of an owned asset are called ________.Student Answer:incremental costslost resale opportunitiesopportunity costssunk costsQuestion 9. Question : The clientele effect refers to ________.Student Answer:the relevance of dividend policy on a firm’s share valuea firm’s ability to attract stockholders whose dividend preferences are similar to the firm’s dividend policythe informational content of dividends that helps in predicting the future earnings and growth of a firmthe “bird-in-the-hand” argumentQuestion 10. Question : An increase in fixed operating costs will result in ________.Student Answer:a decrease in the degree of operating leveragean increase in the degree of operating leveragea decrease in the degree of financial leveragean increase in the degree of financial leverageQuestion 11. Question : A firm has an average age of inventory of 60 days, an average collection period of 45 days, and an average payment period of 30 days. The firm’s cash conversion cycle is ________ days.Student Answer:154575135Question 12. Question : What is the NPV for a project whose cost of capital is 15 percent and initial after-tax cost is $5,000,000 and is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3, and $1,300,000 in year 4?Student Answer: $1,700,000$371,764-$137,053-$4,862,947Question 13. Question : Breakeven analysis is used by a firm ________.Student Answer:to determine the level of operations necessary to cover all fixed operating coststo determine the least cost of producing goods and servicesto evaluate the profitability associated with various levels of salesto determine the demand of a productQuestion 14. Question : Cash outlays that had been previously made and have no effect on the cash flows relevant to a current decision are called ________.Student Answer:incremental historical costsincremental past expensesopportunity costs foregonesunk costsQuestion 15. Question : Which of the following is true of a dividend payout?Student Answer:When a firm announces that it will increase its dividend, the share price usually decreases on that news.Dividend payments send a positive signal to investors in the marketplace that management believes that the stock is overvalued.When a firm pays out dividends the share price will fall.Dividend payouts have no impact on the share price of a stock in an efficient market.Question 16. Question : If a firm’s fixed operating costs decrease, the firm’s ________.Student Answer:operating breakeven point will decreaseoperating breakeven point will increasesale price per unit will decreasesale price per unit will increaseQuestion 17. Question : ________ projects do not compete with each other; the acceptance of one ________ the others from consideration.Student Answer:Capital; eliminatesIndependent; does not eliminateMutually exclusive; eliminatesReplacement; eliminatesQuestion 18. Question : Generally the least expensive source of long-term capital is ________.Student Answer:retained earningspreferred stocklong-term debtcommon stockQuestion 19. Question : The book value of an asset is equal to the ________.Student Answer:fair market value minus the accounting valueoriginal purchase price plus annual depreciation expenseoriginal purchase price minus accumulated depreciationdepreciated value plus recaptured depreciationQuestion 20. Question : Which of the following is true of leverage?Student Answer:It refers to the effects that operating and financial fixed costs have on the returns that shareholders earn.It is associated with risks which are out of the control of managers.It includes the effect of operating fixed costs on the returns of shareholders and not the financial fixed costs.It is used to evaluate the profitability associated with various levels of sales.Question 21. Question : The tax treatment regarding the sale of existing assets that are sold for more than the original purchase price results in ________.Student Answer:an ordinary tax benefitno tax benefit or liabilitya recaptured depreciation taxed as ordinary incomea capital gain tax liabilityQuestion 22. Question : The cost of common stock equity may be estimated by using the ________.Student Answer:yield curvecapital asset pricing modelbreak-even analysisDuPont analysisQuestion 23. Question : A firm with limited dollars available for capital expenditures is subject to ________.Student Answer:capital dependencycapital gainsworking capital constraintscapital rationingQuestion 24. Question : A firm has issued preferred stock at its $125 per share par value. The stock will pay a $15 annual dividend. The cost of issuing and selling the stock was $4 per share. The cost of the preferred stock is ________.Student Answer: 12.4 percent7.2 percent12 percent15 percentQuestion 25. Question : Which of the following is a fixed cost?Student Answer:inventoryrentdelivery costsdirect laborQuestion 26. Question : ________ projects have the same function; the acceptance of one ________ the others from consideration.Student Answer:Capital; eliminatesIndependent; does not eliminateMutually exclusive; eliminatesReplacement; eliminatesQuestion 27. Question : A firm has fixed operating costs of $525,000. The sales price per unit is $35 and its variable costs per unit is $22.50. The firm’s operating breakeven point in units is ________.Student Answer: 23,33032,00042,00052,000Question 28. Question : ________ is the potential use of fixed financial charges to magnify the effects of changes in earnings before interest and taxes on a firm’s earnings per share.Student Answer:Financial leverageOperating leverageTotal leverageDegree of operating leverageQuestion 29. Question : What is the IRR for the following project if its initial after-tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3, and $1,300,000 in year 4?Student Answer:15.57%0.00%13.57%12.25%Question 30. Question : What is the profitability index of a project that has an initial cash outflow of $600, an inflow of $250 for the next 3 years and a cost of capital of 10 percent?Student Answer:0.6672.0361.0362.739Question 31. Question : The payment of cash dividends to corporate stockholders is decided by the ________.Student Answer:creditorsstockholdersSECboard of directorsQuestion 32. Question : ________ is the process of evaluating and selecting long-term investments that are consistent with a firm’s goal of maximizing owners’ wealth.Student Answer:Recapitalizing assetsCapital budgetingRatio analysisSecuritizationQuestion 33. Question : A firm has common stock with a market price of $25 per share and an expected dividend of $2 per share at the end of the coming year. The growth rate in dividends has been 5 percent. The cost of the firm’s common stock equity is ________.Student Answer: 5 percent8 percent10 percent13 percentQuestion 34. Question : Which of the following would be used in the computation of an initial investment?Student Answer:the annual after-tax inflow expected from the investmentthe initial purchase price of the investmentthe historic cost of the existing investmentthe profits from the new investmentQuestion 35. Question : According to the residual theory of dividends, if a firm’s equity need exceeds the amount of retained earnings, the firm would ________.Student Answer:borrow to pay the cash dividendsell additional stock to pay the cash dividendpay no cash dividendspay less dividendsQuestion 36. Question : Tangshan Mining has common stock at par of $200,000, paid-in capital in excess of par of $400,000, and retained earnings of $280,000. In states where the firm’s legal capital is defined as the par value of common stock, the firm could pay out ________ in cash dividends without impairing its capitalStudent Answer: $200,000$680,000$600,000$880,000Question 37. Question : A tax adjustment must be made in determining the cost of ________.Student Answer:long-term debtcommon stockpreferred stockretained earningsQuestion 38. Question : The change in net working capital when evaluating a capital budgeting decision is ________.Student Answer:the change in fixed liabilities minus the change in fixed assetsthe increase in current assetsthe increase in current liabilitiesthe change in current assets minus the change in current liabilitiesQuestion 39. Question : The ________ is a weighted average of the cost of funds which reflects the interrelationship of financing decisions.Student Answer:internal rate of returnsunk costcost of capitalrisk-free rateQuestion 40. Question : A firm has determined its cost of each source of capital and optimal capital structure, which is composed of the following sources and target market value proportions:Target MarketSource of Capital Proportions After-Tax CostLong-Term Debt 40% 6%Preferred Stock 10% 11%Common Stock 50% 15%The weighted average cost of capital is ________.Student Answer:6 percent10.7 percent11 percent15 percentGrade Details – All QuestionsPage: 1 2Question 1. Question : Which of the following capital budgeting techniques ignores the time value of money?Question 2. Question : The ________ is the rate of return that a firm must earn on its investments in order to maintain the market value of its stock.Question 3. Question : The cost of common stock equity is ________.Student Answer:the cost of the guaranteed stated dividend expected by the stockholdersthe rate at which investors discount the expected dividends of the firm to determine its share valuethe after-tax cost of the interest obligationsthe historical cost of floating the stock issueQuestion 4. Question : A firm has an average age of inventory of 90 days, an average collection period of 40 days, and an average payment period of 30 days. The firm’s operating cycle is ________ days.Student Answer:11013012070Question 5. Question : Which of the following is true of current assets?Student Answer:The time of conversion of current assets to more liquid form is relatively unpredictable.They are used to fund long-term operations and pay long-term expenses.They are more profitable because they add more value to the product than that provided by fixed assets.They are sources of short-term financing for a firmQuestion 6. Question : At a firm’s quarterly dividend meeting held April 9, the directors declared a $0.50 per share cash dividend for the holders of record on Monday, May 1. The firm’s stock will sell ex dividends on ________.Student Answer:April 28May 5April 29April 27Question 7. Question : Generally, the order of cost, from the least expensive to the most expensive, for long-term capital of a corporation is ________.Student Answer:new common stock, retained earnings, preferred stock, long-term debtcommon stock, preferred stock, long-term debt, short-term debtpreferred stock, new common stocks, common stock, retained earningslong-term debt, preferred stock, retained earnings, new common stockQuestion 8. Question : Cash flows that could be realized from the best alternative use of an owned asset are called ________.Student Answer:incremental costslost resale opportunitiesopportunity costssunk costsQuestion 9. Question : The clientele effect refers to ________.Student Answer:the relevance of dividend policy on a firm’s share valuea firm’s ability to attract stockholders whose dividend preferences are similar to the firm’s dividend policythe informational content of dividends that helps in predicting the future earnings and growth of a firmthe “bird-in-the-hand” argumentQuestion 10. Question : An increase in fixed operating costs will result in ________.Student Answer:a decrease in the degree of operating leveragean increase in the degree of operating leveragea decrease in the degree of financial leveragean increase in the degree of financial leverageQuestion 11. Question : A firm has an average age of inventory of 60 days, an average collection period of 45 days, and an average payment period of 30 days. The firm’s cash conversion cycle is ________ days.Student Answer:154575135Question 12. Question : What is the NPV for a project whose cost of capital is 15 percent and initial after-tax cost is $5,000,000 and is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3, and $1,300,000 in year 4?Student Answer: $1,700,000$371,764-$137,053-$4,862,947Question 13. Question : Breakeven analysis is used by a firm ________.Student Answer:to determine the level of operations necessary to cover all fixed operating coststo determine the least cost of producing goods and servicesto evaluate the profitability associated with various levels of salesto determine the demand of a productQuestion 14. Question : Cash outlays that had been previously made and have no effect on the cash flows relevant to a current decision are called ________.Student Answer:incremental historical costsincremental past expensesopportunity costs foregonesunk costsQuestion 15. Question : Which of the following is true of a dividend payout?Student Answer:When a firm announces that it will increase its dividend, the share price usually decreases on that news.Dividend payments send a positive signal to investors in the marketplace that management believes that the stock is overvalued.When a firm pays out dividends the share price will fall.Dividend payouts have no impact on the share price of a stock in an efficient market.Question 16. Question : If a firm’s fixed operating costs decrease, the firm’s ________.Student Answer:operating breakeven point will decreaseoperating breakeven point will increasesale price per unit will decreasesale price per unit will increaseQuestion 17. Question : ________ projects do not compete with each other; the acceptance of one ________ the others from consideration.Student Answer:Capital; eliminatesIndependent; does not eliminateMutually exclusive; eliminatesReplacement; eliminatesQuestion 18. Question : Generally the least expensive source of long-term capital is ________.Student Answer:retained earningspreferred stocklong-term debtcommon stockQuestion 19. Question : The book value of an asset is equal to the ________.Student Answer:fair market value minus the accounting valueoriginal purchase price plus annual depreciation expenseoriginal purchase price minus accumulated depreciationdepreciated value plus recaptured depreciationQuestion 20. Question : Which of the following is true of leverage?Student Answer:It refers to the effects that operating and financial fixed costs have on the returns that shareholders earn.It is associated with risks which are out of the control of managers.It includes the effect of operating fixed costs on the returns of shareholders and not the financial fixed costs.It is used to evaluate the profitability associated with various levels of sales.Question 21. Question : The tax treatment regarding the sale of existing assets that are sold for more than the original purchase price results in ________.Student Answer:an ordinary tax benefitno tax benefit or liabilitya recaptured depreciation taxed as ordinary incomea capital gain tax liabilityQuestion 22. Question : The cost of common stock equity may be estimated by using the ________.Student Answer:yield curvecapital asset pricing modelbreak-even analysisDuPont analysisQuestion 23. Question : A firm with limited dollars available for capital expenditures is subject to ________.Student Answer:capital dependencycapital gainsworking capital constraintscapital rationingQuestion 24. Question : A firm has issued preferred stock at its $125 per share par value. The stock will pay a $15 annual dividend. The cost of issuing and selling the stock was $4 per share. The cost of the preferred stock is ________.Student Answer: 12.4 percent7.2 percent12 percent15 percentQuestion 25. Question : Which of the following is a fixed cost?Student Answer:inventoryrentdelivery costsdirect laborQuestion 26. Question : ________ projects have the same function; the acceptance of one ________ the others from consideration.Student Answer:Capital; eliminatesIndependent; does not eliminateMutually exclusive; eliminatesReplacement; eliminatesQuestion 27. Question : A firm has fixed operating costs of $525,000. The sales price per unit is $35 and its variable costs per unit is $22.50. The firm’s operating breakeven point in units is ________.Student Answer: 23,33032,00042,00052,000Question 28. Question : ________ is the potential use of fixed financial charges to magnify the effects of changes in earnings before interest and taxes on a firm’s earnings per share.Student Answer:Financial leverageOperating leverageTotal leverageDegree of operating leverageQuestion 29. Question : What is the IRR for the following project if its initial after-tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3, and $1,300,000 in year 4?Student Answer:15.57%0.00%13.57%12.25%Question 30. Question : What is the profitability index of a project that has an initial cash outflow of $600, an inflow of $250 for the next 3 years and a cost of capital of 10 percent?Student Answer:0.6672.0361.0362.739Question 31. Question : The payment of cash dividends to corporate stockholders is decided by the ________.Student Answer:creditorsstockholdersSECboard of directorsQuestion 32. Question : ________ is the process of evaluating and selecting long-term investments that are consistent with a firm’s goal of maximizing owners’ wealth.Student Answer:Recapitalizing assetsCapital budgetingRatio analysisSecuritizationQuestion 33. Question : A firm has common stock with a market price of $25 per share and an expected dividend of $2 per share at the end of the coming year. The growth rate in dividends has been 5 percent. The cost of the firm’s common stock equity is ________.Student Answer: 5 percent8 percent10 percent13 percentQuestion 34. Question : Which of the following would be used in the computation of an initial investment?Student Answer:the annual after-tax inflow expected from the investmentthe initial purchase price of the investmentthe historic cost of the existing investmentthe profits from the new investmentQuestion 35. Question : According to the residual theory of dividends, if a firm’s equity need exceeds the amount of retained earnings, the firm would ________.Student Answer:borrow to pay the cash dividendsell additional stock to pay the cash dividendpay no cash dividendspay less dividendsQuestion 36. Question : Tangshan Mining has common stock at par of $200,000, paid-in capital in excess of par of $400,000, and retained earnings of $280,000. In states where the firm’s legal capital is defined as the par value of common stock, the firm could pay out ________ in cash dividends without impairing its capitalStudent Answer: $200,000$680,000$600,000$880,000Question 37. Question : A tax adjustment must be made in determining the cost of ________.Student Answer:long-term debtcommon stockpreferred stockretained earningsQuestion 38. Question : The change in net working capital when evaluating a capital budgeting decision is ________.Student Answer:the change in fixed liabilities minus the change in fixed assetsthe increase in current assetsthe increase in current liabilitiesthe change in current assets minus the change in current liabilitiesQuestion 39. Question : The ________ is a weighted average of the cost of funds which reflects the interrelationship of financing decisions.Student Answer:internal rate of returnsunk costcost of capitalrisk-free rateQuestion 40. Question : A firm has determined its cost of each source of capital and optimal capital structure, which is composed of the following sources and target market value proportions:Target MarketSource of Capital Proportions After-Tax CostLong-Term Debt 40% 6%Preferred Stock 10% 11%Common Stock 50% 15%The weighted average cost of capital is ________.Student Answer:6 percent10.7 percent11 percent15 percent

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