(TCO A) In the United States, the most common type of business by number of businesses is the _____.

$19.99
FIN 515 Managerial Finance Final Exam 100% Correct Answer (2018)

1.(TCO A) In the United States, the most common type of business by number of businesses is the _____.

 

sole proprietorship

 

 

C corporation

 

 

S corporation

 

 

LLC

 

2.TCO A) A sole proprietorship is owned by

 

one person.

 

one or two people, but if there are two owners, they must be married to each other.

 

 

up to 100 owners.

 

up to 64 owners.

 

3.(TCO B) Which of the following would cause the future value of an annuity to decrease?

 

Reducing the number of payments.

 

 

Increasing the number of payments.

 

 

Increasing the interest rate.

 

 

Decreasing the liquidity of the payments.

 

4. (TCO B) Which of the following is an annuity due?

 

A typical car loan.

 

 

A typical mortgage.

 

 

A typical apartment rental agreement.

 

 

A credit card balance.

 

5. (TCO D) A given bond has 5 years to maturity. It has a face value of $1,000. It has a YTM of 6% and the coupons are paid semiannually at a 10% annual rate. What does the bond currently sell for? (Show workings)

 

6. (TCO D) A bond currently sells for $887 even though it has a par of $1,000. It was issued two years ago and had a maturity of 10 years. The coupon rate is 7% and the interest payments are made semiannually. What is its YTM? (Show workings)

7. (TCO A) What are the names of the four components of the DuPont Identity and how are they calculated? What does each measure?

8. (TCO D) A stock has just paid a dividend and will pay a dividend of $3.00 in a year. The dividend will stay constant for the rest of time. The return on equity for similar stocks is 14%. What is P0? (Show workings)

9. (TCO D) A stock has just paid a dividend has declared an annual dividend of $12.00 to be paid one year from today. The dividend is expected to grow at a 7% annual rate. The return on equity for similar stocks is 12%. What is P0? (Show workings)

10. TCO C) Explain thoroughly how stock portfolios affect the risk to an investor.

11.(TCO D) A company has 30 million shares outstanding trading for $8 per share. It also has $90 million in outstanding debt. If its equity cost of capital is 15%, and its debt cost of capital is 9%, and its effective corporate tax rate is 40%, what is its weighted average cost of capital? (Show workings)

12. (TCO A) Name and describe the three functions of managerial finance. For each, give an example other than those used in the text and lecture.

13. TCO G) Other things being equal, would a firm prefer a longer or shorter Cash Conversion Cycle? What are some examples of ways a firm could attain this?

14. (TCO E) A company has the opportunity to do any of the projects for which the net cash flows per year are shown below. The company has a cost of capital of 12%. Which should the company do and why? You must use at least two capital budgeting methods. Show your work.