1. A firm has $300 in inventory, $600 in fixed assets, $200 in accounts receivable, $100 in accounts payable, and $50 in cash. What is the amount of current assets?
A. $1,150
B. $550
C. $1,200
D. $500
E. $600
2. The Eternal Gift Insurance Company is offering you a policy that will pay you and your heirs $10,000 a year forever. The cost of the policy is $285,000. What is the rate of return on this policy?
A. 3.60%
B. 3.51%
C. 3.46%
D. 2.85%
E. 3.25%
3. Your firm has net income of $198 on total sales of $1,200. Labor expense is $715 and depreciation is $145. The tax rate is 34%. What is the operating cash flow?
A. $241
B. $383
C. $93
D. $340
E. $485
4. Total assets are $900, fixed assets are $600, long-term debt is $500, and short-term debt is $200. What is the amount of net working capital?
A. $0
B. $300
C. $200
D. $400
E. $100
5. Your firm offers a 10-year, zero-coupon bond. The yield to maturity is 8.8%. What is the current market price of a $1,000 face value bond?
A. $473.26
B. $835.56
C. $1,088.00
D. $919.12
E. $430.24
6. Consider a bond with semiannual coupons and 8 years to maturity. The coupon rate is 7%, and the yield to maturity is 8% on bonds of this risk. What is this bond's price?
A. $942.50
B. $911.52
C. $941.74
D. $1,064.81
E. $927.65
7. Consider the bonds below. If interest rates rise overnight, which of the bonds below will experience the greatest decrease in price, in percentage terms?
A. a 30-year, zero-coupon bond
B. a 1-year, zero-coupon bond
C. a 30-year, 8% coupon bond
D. a 1-year, 8% coupon bond
E. an 8% coupon bond with 2 days to maturity
8. If a business takes out a $10,000, 7 year, 12% loan, the decrease in principal in year 1 is: (assume annual payments).
A. $991.17
B. $1,200.00
C. $2,456.54
D. $2,191.17
E. $1,976.38
9. A firm has sales of $1,500, net income of $100, total assets of $1,000, and total equity of $700. Interest expense is $50. What is the common-size statement value of the interest expense?
A. 7.1%
B. 16.7%
C. 3.3%
D. 50.0%
E. 5.0%
10. Which one of the following statements is correct if a firm has a receivables turnover measure of 10?
A. It takes a firm 36.5 days to sell its inventory and collect the payment from the sale.
B. It takes a firm 36.5 days to pay its creditors.
C. The firm has an average collection period of 36.5 days.
D. It takes a firm 10 days to collect payment from its customers.
E. The firm has ten times more in accounts receivable than it does in cash.
11. Angelina's made two announcements concerning its common stock today. First, the company announced that its next annual dividend has been set at $2.16 a share. Secondly, the company announced that all future dividends will increase by 4% annually. What is the maximum amount you should pay to purchase a share of Angelina's stock if your goal is to earn a 10% rate of return?
A. $36.00
B. $22.46
C. $34.62
D. $37.44
E. $21.60
12. Todd is able to pay $350 a month for five years for a car. If the interest rate is 4.8% (compounded monthly), how much can Todd afford to borrow to buy a car?
A. $1,523.73
B. $6,853.99
C. $18,637.10
D. $15,686.82
E. $21,000.00