1. What are the tools available for the manager in financial planning?

• Delaying disbursement of cash, reducing collection period, cash management, and Increasing inventory turnover

• Delaying disbursement of cash and cash management

• Increasing inventory turnover and reducing collection period

• Reducing collection period and delaying disbursement of cash

2. As new capital budgeting projects arise, we must estimate__________.

• when such projects will require cash flows

• the float costs for financing the project

• the cost of the loan for the specific project

• the cost of the stock being sold for the specific project

3. Five years ago, Jane invested $5,000 and locked in an 8 percent annual interest rate for 25 years (ending 20 years from now). James can make a 20-year investment today and lock in a 10 percent interest rate. How much money should he invest now in order to have the same amount of money in 20 years as Jane?

• $3,160.43

• $3,464.11

• $5,089.91

• $7,346.64

4. A firm is expected to pay a dividend of $2.00 next year and $2.14 the following year. Financial analysts believe the stock will be at their target price of $75.00 in two years. Compute the value of this stock with a required return of 10 percent.

• $79.14

• $65.40

• $66.67

• $65.57

5. The overall goal of the financial manager is to__________.

• maximize shareholder wealth

• maximize net income

• minimize total costs

• maximize earnings per share

6. Suppose that Model Nails, Inc.'s capital structure features 60 percent equity, 40 percent debt, and that its before-tax cost of debt is 6 percent, while its cost of equity is 10 percent. If the appropriate weighted average tax rate is 28 percent, what will be Model Nails' WACC?

• 8.40 percent

• 16.00 percent

• 8.00 percent

• 7.73 percent

7. We can estimate a stock's value by__________.

• discounting the future dividends and future stock price appreciation

• compounding the past dividends and past stock price appreciation

• using the book value of the total stockholder equity section

• using the book value of the total assets divided by the number of shares outstanding

8. When firms use multiple sources of capital, they need to calculate the appropriate discount rate for valuing their firm's cash flows as__________.

• a simple average of the capital components costs

• a weighted average of the capital components costs

• a sum of the capital components costs

• they apply to each asset as they are purchased with their respective forms of debt or equity

9. Which of these is the term for portfolios with the highest return possible for each risk level? 

• Efficient portfolios

• Optimal portfolios

• Total portfolios

• Modern portfolios

10. Which of the following can create ethical dilemmas between corporate managers and stockholders?

• Auditors

• Venture Capitalist

• Board of directors

• Agency relationship

11. Which of these ratios show the combined effects of liquidity, asset management, and debt management on the overall operation results of the firm?

• Profitability

• Financial

• Liquidity

• Coverage