Question 1
Suppose a firm's sales increased from $4 million in 2008 to more than $7 million in 2012. What has been the average annual growth rate in sales?
13%
15%
12%
14%
Question 2
The expected value of a normal distribution of prices for a stock is $30. If you are 99% sure that the price of the stock will be between $20 and $40, then what is the variance of the stock price.
$6.08
$26.03
$15.08
$36.95
Question 3
Assume today is January 1st. If a wealthy relative offered to set aside an initial $4,000 today, and then an additional $10,000 at the end of each year (the first being on December 31st of this year) for the next 5 years, how much would you have in your account after 5 years if the funds grew at 10%?
$61,051
$109,733
$67,493
$40,525
Question 4
Duane Corp. has taxable income of $90,000. What is the firm's average tax rate? (Use Exhibit 3.6 in your text.)
22.3%
20.9%
34.0%
19.3%
Question 5
About 75 percent of all businesses in the United States are sole proprietorships.
True
False
Question 6
The following data can be found on Silverton Inc.'s 2012 balance sheet: Cash $45,000, Marketable Securities $70,000, Accounts Receivable $500,000, Inventory $525,000, Net Plant and Equipment $400,000, Accounts Payable $75,000, and Notes Payable $350,000. Please calculate Silverton Inc.'s Quick Ratio.
2.68
0.21
1.45
2.39
Question 7
Sainsbury Inc. has a beta of 0.8. If the expected market return is 13.5% and the risk-free rate is 6%, what is the appropriate required return of Sainsbury (using the CAPM)?
9.3%
11.1%
10.2%
12.0%
Question 8
The following data can be found on Stevenson Inc.'s balance sheet: Cash of $300,000; marketable securities of $120,000; accounts receivable of $1,000,000; inventory of $750,000; net plant and equipment of $900,000; and total current liabilities of $960,000. Calculate Jorgonson Inc.'s net working capital.
$2,110,000
$1,210,000
$460,000
$640,000
Question 9
In investment banking, the process by which the investment banker helps the company sell its new security issue is called
underwriting
marketing
distribution
origination
Question 10
We wish to accumulate $20,000 after 10 years. If we can secure an interest rate of 11%, how much must be set aside at the end of each of the ten periods?
$932
$945
$1196
$1079
Question 11
Assume you wanted to double the amount of money in your savings account in the next nine years. Approximately what interest rate would you need to earn to accomplish this?
8%
10%
12%
unable to determine based on the information provided
Question 12
Peter's bank will pay him interest compounded quarterly (4 times a year) for 36 months (3 years). If peter deposits $3,000 and earns an annual 4% rate of return, how much will Peter have at the end of 36 months?
$3,380
$2,667
$3,375
$3,517
Question 13
Gemini Inc.'s debt increases while their assets and return on assets remain unchanged. Gemini's return on equity will
increase
decrease
remain unchanged
cannot be determined from the information provided.
Question 14
Which of the following is considered a current liability?
inventories
accounts payable
net plant and equipment
all of the above
Question 15
Bright Light Company has $500,000 in assets and $200,000 of debt. They report net income of $50,000. What is their return on assets?
18.3%
16.7%
25.0%
10.0%
Question 16
Stephen wants to determine the most she should pay to purchase an ordinary annuity. It consists of cash flows of $1,000 at the end of each year for 10 years. He requires a minimum return of at least 10%.
$3,245
$6,145
$1,800
$9,000