Recent Question

Marshall-Miller & Company is considering the purchase of a new machine 1. A firm is considering a new project whose risk is greater than the risk of the firm’s average project, based on all methods for assessing risk. In evaluating this project, it would be reasonable for management to do which of the following? a. Increase the estimated IRR of the project to reflect its greater risk. b. Increase the estimated NPV of the proje ...

Other / Other 27 Apr 2016

Hindelang Inc. is considering a project that has the following cash flow 1. Hindelang Inc. is considering a project that has the following cash flow and WACC data. What is the project's MIRR? Note that a project's projected MIRR can be less than the WACC (and even negative), in which case it will be rejected. WACC: 12.25% Year 0 1 2 3 4 Cash flows -$850 $300 $320 $340 $360 a. 13.42% b. 14.91% c. 16.56% d. 18.22% e. 20.04% ...

Other / Other 27 Apr 2016

Is inflation expected to increase, decrease, or stay 1. Which of the following statements is CORRECT? a. The cash flows for an ordinary annuity all occur at the beginning of the periods. b. If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity. c. The cash flows for an annuity due must all occur at the beginning of the periods. d. The cash flows for an annuity m ...

Other / Other 27 Apr 2016

Which of the following actions would be most likely to reduce conflicts 1. If your mark-up ratio is 25%, what is the margin ratio? a. 15% b. 20% c. 25% d. 28% e. 30% 2. Chang Corp. has $375,000 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $595,000, and its net income was $25,000. Stockholders recently voted in a new management team that has promised to lower ...

Other / Other 27 Apr 2016

Sapp Trucking’s balance sheet shows a total of noncallable 1. Which of the following statements is CORRECT? a. The WACC as used in capital budgeting is an estimate of a company’s before-tax cost of capital. b. The percentage flotation cost associated with issuing new common equity is typically smaller than the flotation cost for new debt. c. The WACC as used in capital budgeting is an estimate of the cost of all the capit ...

Other / Other 27 Apr 2016

How much in dividends did the firm pay 1. Identify which financial statements are appropriate to use for each event listed below. Event 1: Can the firm meet all its short-term obligations? Event 2: How much of the firm’s earnings are put back into the company for reinvestment, and how much is paid out as dividend? a. Balance Sheet, Income Statement b. Balance Sheet, Statement of Cash Flow c. Balance Sheet, Statement of Stockho ...

Other / Other 27 Apr 2016

How much extra will you have at the end of the year 1. Suppose you just won the state lottery, and you have a choice between receiving $2,550,000 today or a 20-year annuity of $250,000, with the first payment coming one year from today. What rate of return is built into the annuity? Disregard taxes. a. 7.12% b. 7.49% c. 7.87% d. 8.26% e. 8.67% 2. Which indenture provision may affect the price of the bond differently? a. c ...

Other / Other 27 Apr 2016

What is the firm's required rate of return 1. Which of the following bonds would have the greatest percentage increase in value if all interest rates in the economy fall by 1%? a. 10-year, zero coupon bond. b. 20-year, 10% coupon bond. c. 20-year, 5% coupon bond. d. 1-year, 10% coupon bond. e. 20-year, zero coupon bond. 2. O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal yield t ...

Other / Other 27 Apr 2016

What is the company's current stock price 1. For a common stock with the current dividend amount of = $.70 (Do = .70), what is the (P)V of it with an annual discount rate of 12% and the dividend is expected to grow at the rate of 10% per annum forever? a. $33.5 b. $35.0 c. $38.5 d. $45.0 e. $37.5 2. The preemptive right is important to shareholders because it a. allows managers to buy additional shares below the current mar ...

Other / Other 27 Apr 2016

How much after-tax operating income does the firm have 1. Prezas Company's balance sheet showed total current assets of $4,250, all of which were required in operations. Its current liabilities consisted of $975 of accounts payable, $600 of 6% short-term notes payable to the bank, and $250 of accrued wages and taxes. What was its net operating working capital? a. $2,874 b. $3,025 c. $3,176 d. $3,335 2. Rao Construction recen ...

Other / Other 27 Apr 2016