1. Aubey Aircraft recently announced that its net income increased sharply from the previous year, yet its net cash flow from operations declined. Which of the following could explain this performance?
A. The company's operating income declined.
B. The company's expenditures on fixed assets declined.
C. The company's cost of goods sold increased.
D. The company's depreciation and amortization expenses declined.
E. The company's interest expense increased.
2. Beranek Corp. has $410,000 of assets, and it uses no debt-it is financed only with common equity. The new CFO wants to employ enough debt to bring the debt to assets ratio to 40%, using the proceeds from the borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio?
a. $155,800
b. $164,000
c. $172,200
d. $180,810
e. $189,851
3. You deposit $1,000 today in a savings account that pays 3.5% interest, compounded annually. How much will your account be worth at the end of 25 years?
A. $2,245.08
B. $2,363.24
C. $2,481.41
D. $2,605.48
E. $2,735.75
4. You sold a car and accepted a note with the following cash flow stream as your payment. Which was the effective price you received for the car, assuming an interest rate of 6.0%?
Years: 0 1 2 3 4
|-----------|--------------|--------------|--------------|
CFs: $0 $1,000 $2,000 $2,000 $2,000
a. $5,987
b. $6,286
c. $6,600
d. $6,930
e. $7,277