

A total asset turnover measure of 1.03 means that a firm has $1.03 in:
Selected Answer:
a.
sales for every $1 in total assets.
Correct Answer:
a.
sales for every $1 in total assets.
 Question 2
0.5 out of 0.5 points

If a firm produces a 10% return on assets and also a 10% return on equity, then the
firm:
Selected Answer:
e.
has no debt of any kind.
Correct Answer:
e.
has no debt of any kind.
 Question 3
0.5 out of 0.5 points

If a firm decreases its operating costs, all else constant, then:

Selected Answer:
b.
both the return on assets and the return on equity increase.
Correct Answer:
b.
both the return on assets and the return on equity increase.
 Question 4
0.5 out of 0.5 points

The sustainable growth rate will be equivalent to the internal growth rate when:
Selected Answer:
a.
a firm has no debt.
Correct Answer:
a.
a firm has no debt.
Question 5
0.5 out of 0.5 points

Use the following information to answer Questions 5 - 23.

 Year Year Year Year
2014 2015 2014 2015
Cash 140 210 Accounts payable 320 280
Accounts receivable 340 380 Notes payable 400 300
Inventory 550 590 Long-term debt 1,100 1,400
Net fixed assets 3,600 3,500 Common stock 1,200 980
Retained earnings 1,610 1,720
Total assets 4,630 4,680 Total liab & Total equity 4,630 4,680

Year 2015
Sales 6,230
Cost of goods sold 4,720
Depreciation 440
Interest 75
Taxes 350
Net income 645
Number of shares outstanding 100

What is the current ratio in 2015?

Selected Answer:
d.
2.03

Correct Answer:
d.
2.03

 Question 6
0.5 out of 0.5 points

What is the quick ratio in 2015?

Selected Answer:
a.
1.02

Correct Answer:
a.
1.02

 Question 7
0.5 out of 0.5 points

What is the total debt ratio in 2015?

Selected Answer:
a.
42.31%

Correct Answer:
a.
 42.31%

 Question 8
0.5 out of 0.5 points

What is the equity multiplier in 2015?

Selected Answer:
b.
1.73

Correct Answer:
b.
1.73

 Question 9
0.5 out of 0.5 points

What is the times-interest-earned ratio in 2015?

Selected Answer:
e.
14.27

Correct Answer:
e.
14.27

 Question 10
0 out of 0.5 points

What is the cash coverage ratio in 2015?

Selected Answer:
e.
20.13%

Correct Answer:
a.
20.13

 Question 11
0.5 out of 0.5 points

What is the days' sales in inventory in 2015?

Selected Answer:
c.
45.63 days

Correct Answer:
c.
45.63 days

 Question 12
0.5 out of 0.5 points
 What is the days' sales in receivables in 2015?

Selected Answer:
c.
22.27 days

Correct Answer:
c.
22.27 days

 Question 13
0.5 out of 0.5 points

What is the days' sales in payables in 2015?

Selected Answer:
b.
21.65 days

Correct Answer:
b.
21.65 days

 Question 14
0.5 out of 0.5 points

What is the total asset turnover in 2015?

Selected Answer:
d.
1.33

Correct Answer:
d.
1.33

 Question 15
0.5 out of 0.5 points

What is the profit margin in 2015?

Selected Answer:
b.
0.10

Correct Answer:
b.
0.10

 Question 16
0.5 out of 0.5 points

What is the return on assets in 2015?

 Selected Answer:
b.
0.14

Correct Answer:
b.
0.14

 Question 17
0.5 out of 0.5 points

What is the return on equity in 2015?

Selected Answer:
b.
0.24

Correct Answer:
b.
0.24

 Question 18
0.5 out of 0.5 points

What is the price-earnings ratio in 2015 if the stock price is $25 per share?

Selected Answer:
a.
3.88

Correct Answer:
a.
3.88

 Question 19
0.5 out of 0.5 points

What is the maket-to-book ratio in 2015 if the stock price is $45 per share?

Selected Answer:
a.
1.67

Correct Answer:
a.
1.67

 Question 20
0 out of 0.5 points

What is the enterprise value multiple in 2015 if the stock price is $45 per share?

Selected Answer:
b.
4.59
 Correct Answer:
d.
3.97

 Question 21
0.5 out of 0.5 points

What is the dividend payout ratio in 2015?

Selected Answer:
e.
0.83

Correct Answer:
e.
0.83

 Question 22
0.5 out of 0.5 points

What is the internal growth rate in 2015?

Selected Answer:
d.
0.02

Correct Answer:
d.
0.02

 Question 23
0.5 out of 0.5 points

What is the sustainable growth rate in 2015?

Selected Answer:
b.
0.04

Correct Answer:
b.
0.04

 Question 24
0.5 out of 0.5 points

You are comparing two investment options. The cost to invest in either option is the
same today. Both options will provide you with $20,000 of income. Option A pays five
annual payments starting with $8,000 the first year followed by four annual payments
of $3,000 each. Option B pays five annual payments of $4,000 each. Which one of the
following statements is correct given these two investment options?
Selected
a.
Answer:
 Option A is the better choice of the two given any positive rate of
return.
Correct Answer:
a.
Option A is the better choice of the two given any positive rate of
return.
 Question 25
0.5 out of 0.5 points

The time value of money concept can be defined as:

Selected
c.
Answer:
the relationship between a dollar to be received in the future and a
dollar today.
Correct
c.
Answer:
the relationship between a dollar to be received in the future and a
dollar today.
 Question 26
0 out of 0.5 points

Suzette is going to receive $10,000 today as the result of an insurance settlement. In

addition, she will receive $15,000 one year from today and $25,000 two years from
today. She plans on saving all of this money and investing it for her retirement. If
Suzette can earn an average of 11% on her investments, how much will she have in her
account if she retires 25 years from today?
Selected Answer:
a.
$536,124.93
Correct Answer:
e.
$595,098.67
 Question 27
0.5 out of 0.5 points

If you have a choice to earn simple interest on $10,000 for three years at 8% or
annually compound interest at 7.5% for three years which one will pay more and by
how much?
Selected Answer:
b.
Compound interest by $22.97
Correct Answer:
b.
Compound interest by $22.97
 Question 28
0.5 out of 0.5 points

Todd is able to pay $175 a month for five years for a car. If the interest rate is 4.9
percent, how much can Todd afford to borrow to buy a car?
Selected Answer:
a.
$9,295.92
Correct Answer:
a.
$9,295.92
 Question 29
0.5 out of 0.5 points

The Ajax Company just decided to save $2,500 a month for the next five years as a
safety net for recessionary periods. The money will be set aside in a separate savings
account which pays 3.25% interest compounded monthly. It deposits the first $2,500
today. If the company had wanted to deposit an equivalent lump sum today, how much
would it have had to deposit?
Selected Answer:
d.
$138,648.81
Correct Answer:
d.
$138,648.81
 Question 30
0.5 out of 0.5 points

The Robertson Firm is considering a project that costs $135,500 to undertake. The
project will yield cash flows of $5,894.35 monthly for 30 months. What is the rate of
return on this project?
Selected Answer:
b.
21.74%
Correct Answer:
b.
21.74%
 Question 31
0.5 out of 0.5 points

You just paid $350,000 for a policy that will pay you and your heirs $12,000 a year
forever. What rate of return are you earning on this policy?
Selected Answer:
c.
3.43%
 Correct Answer:
c.
3.43%
 Question 32
0.5 out of 0.5 points

You are considering a job offer. The job offers an annual salary of $52,000, $55,000,
and $60,000 a year for the next three years, respectively. The offer also includes a
starting bonus of $2,000 payable immediately. What is this offer worth to you today at
a discount rate of 6 percent?
Selected Answer:
a.
$150,383.56
Correct Answer:
a.
$150,383.56
 Question 33
0.5 out of 0.5 points

You borrow $149,000 to buy a house. The mortgage rate is 7.5% and the loan period is
30 years. Payments are made monthly. If you pay for the house according to the loan
agreement, how much total interest will you pay?
Selected Answer:
d.
$226,059
Correct Answer:
d.
$226,059
 Question 34
0.5 out of 0.5 points

The Great Giant Corp. has a management contract with its newly hired president. The
contract requires a lump sum payment of $25 million be paid to the president upon the
completion of her first ten years of service. The company wants to set aside an equal
amount of funds each year to cover this anticipated cash outflow. The company can
earn 6.5% on these funds. How much must the company set aside each year for this
purpose?
Selected Answer:
d.
$1,852,617.25
Correct Answer:
d.
$1,852,617.25
 Question 35
0.5 out of 0.5 points
 Winston Enterprises would like to buy some additional land and build a new factory.
The anticipated total cost is $136 million. The owner of the firm is quite conservative
and will only do this when the company has sufficient funds to pay cash for the entire
expansion project. Management has decided to save $450,000 a month for this
purpose. The firm earns 6% compounded monthly on the funds it saves. How long does
the company have to wait before expanding its operations?
Selected Answer:
d.
184.61 months
Correct Answer:
d.
184.61 months
 Question 36
0.5 out of 0.5 points

You retire at age 60 and expect to live another 27 years. On the day you retire, you have
$464,900 in your retirement savings account. You are conservative and expect to earn
4.5% on your money during your retirement. How much can you withdraw from your
retirement savings each month if you plan to die on the day you spend your last penny?
Selected Answer:
a.
$2,481.27
Correct Answer:
a.
$2,481.27
 Question 37
0.5 out of 0.5 points

Today, you are retiring. You have a total of $413,926 in your retirement savings and
have the funds invested such that you expect to earn an average of 3 percent,
compounded monthly, on this money throughout your retirement years. You want to
withdraw $2,500 at the beginning of every month, starting today. How long will it be
until you run out of money?
Selected Answer:
a.
213.29 months
Correct Answer:
a.
213.29 months
 Question 38
0.5 out of 0.5 points

Today, you turn 21. Your birthday wish is that you will be a millionaire by your 40th
birthday. In an attempt to reach this goal, you decide to save $20 a day, every day until
 you turn 40. You open an investment account and deposit your first $20 today. What
rate of return must you earn to achieve your goal?
Selected Answer:
c.
16.70%
Correct Answer:
c.
16.70%
 Question 39
0.5 out of 0.5 points

Your credit card company quotes you a rate of 16.5 percent. Interest is billed monthly.
What is the actual rate of interest you are paying?
Selected Answer:
d.
17.81%
Correct Answer:
d.
17.81%
 Question 40
0.5 out of 0.5 points

Aunt Clarisse has promised to leave you an annuity that will pay $100 next year and
grow at an annual rate of 4%. The payments are expected to go on indefinitely and the
interest rate is 9%. What is the value of the growing perpetuity?
Selected Answer:
d.
$2,000
Correct Answer:
d.
$2,000
Thursday, September 20, 2018 8:39:29 PM EDT