Question 1 Huffy Inc. manufactures a line of bicycles. Their average selling price is $200 per unit with a variable cost of $120 per unit. Huffy's annual fixed expenses are $240,000 per year. What is the break-even point in units for the company?
5,000
4,000
3,000
2,000
Question 2 A company expects to receive the following cash flows at the end of each respective period: Year 1 - $1,000; Year 2 - $1,200; Year 3 - $2,200; and then $1,300 each year for the next five years after (years 4 through 8). With a discount rate of 5%, what is the present value of the cash flows?
$8,429
$8,803
$7,262
$6,943
Question 3 If shareholder wealth is measured by the market capitalization of the firm, what would be the total shareholder wealth of a firm that has 150,000 common shares outstanding and 25,000 preferred shares issued? Its current common stock price is $50.00, and its current preferred stock price per share is $25.00.
$8,750,000
$8,000,000
$7,500,000
$7,000,000
Question 4 Huffy Inc. manufactures a line of bicycles. Their average selling price is $200 per unit with a variable cost of $120 per unit. Huffy's annual fixed expenses are $240,000 per year. Calculate the company's EBIT at 9,000 units.
$160,000
$800,000
$480,000
$0
Question 5 In 2011, Whitetree Inc. had a net income of $240,000, depreciation expense of $30,000, a decrease in accounts receivable of $35,000, an increase in inventory of $20,000, a decrease in accounts payable of $25,000, an increase in plant and equipment of $200,000, an increase in bonds payable of $70,000, and $80,000 of common stock dividends paid. What is the net increase (decrease) in Whitetree Inc.'s cash flows?
net increase of $25,000
net increase of $50,000
net decrease of $25,000
net decrease of $50,000
Question 6 Friedrich Inc. has total assets of $580,000, total liabilities of $210,000, a preferred stock obligation of $20,000, and 50,000 outstanding shares of common stock. What is Friedrich Inc.'s book value per share?
7.8
7.4
7.0
8.0
Question 7
In 2012, Dunlop Corp. had sales of $1.5 million, a profit margin of 10%, common stock of $250,000 and retained earnings of $500,000. What was Dunlop's return on equity?
20%
5%
15%
10%
Question 8
We wish to accumulate $10,000 after 5 years. If we can secure an interest rate of 6%, how much must be set aside at the end of each of the five periods?
$1,470
$1,774
$1,528
$1,684
Question 9 The following data can be found on Jorgonson 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 quick ratio.
2.26
3.20
1.48
2.42
Question 10
Ludwig Corp. has $750,000 in assets and $250,000 of debt. They report net income of $125,000. What is the return on the stockholders' equity?
18.3%
25.0%
16.7%
10.0%
Question 11
Money markets refer to those markets dealing with securities that have a life of one year or less and capital markets refer to those markets where securities have a life greater than one year.
True
False
Question 12
Assume a company anticipates selling 10,000 units a year. Each order will cost the company $40 to place; and the price per unit is $16 with a 20% carrying cost to maintain the average inventory. Please find the EOQ.
250
500
1000
750
Question 13
A firm sells 60,000 units, and their fixed costs are $50,000, variable cost per unit is $4.00, and the price per unit is $5.00. If a firm has $2,000 in interest payments, what is the firm's degree of combined leverage?
12.5
7.5
15.0
10.0
Question 14
Manchester Building Inc. has beginning inventory of 25,000 units, will sell 100,000 units for the month, and desires to reduce ending inventory to 50% of beginning inventory. How many units should Manchester produce?
75,000
62,500
125,000
87,500
Question 15
Inventory is generally considered less liquid than cash.
False
True
Question 16
When a corporation uses the financial markets to raise new funds, the sale of securities is said to be made in the secondary market.
True
False
Question 17
Assume that George will need $10,000 in eight years. How much will he need to deposit today if his bank can guarantee him an interest rate of 6%?
$6,274
$5,836
$7,234
$6,753
Question 18
Assume an investor has $4,000. What is the worth after ten years if it grows at 6% each year?
$4,953
$4,386
$7,163
$5,234