Management statements is a third technique identified by the author as a method of determining the appropriate weights for WACC calculations. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A comprehensive nonfinancial size-up is a useful tool for: A) financial managers. B) lenders. C) investors. D) All of the above. ANSWER D
Date: September 19th, 2020
The profitability index is the right but not the obligation to make a business decision. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Your firm has a beginning balance of $8,000 cash, $2,000 inventory, and $10,000 initial equity. Your firm is operating in an all-cash environment without taxes. You sold $1,000 of inventory for three times the amount you paid for it. If this is your only transaction, your resulting balance sheet should most closely resemble which of […]
Date: September 19th, 2020
If Home Depot has before-tax earnings of $7,000,000, Pays $2,400,000 in taxes, has no preferred stock, and a beta of 1.20, what is the firm’s current average tax rate? A) 33.33% B) 34.29% C) 35.00% D) 36.14% ANSWER B Explanation: B) Current tax rate = taxes payable/before-tax earnings = $2,400,000/$7,000,000 = 34.29%.
Date: September 19th, 2020
Tangshan Mining has 100,000 shares outstanding and just declared a 3-for-2 stock split. Before the announcement, the firm’s shares were trading at $50.00 per share. After the stock split, the firm’s shares should trade at ________ per share. A) $33.33 B) $66.67 C) $75.00 D) $100.00 ANSWER A
Date: September 19th, 2020
The modified internal rate of return method of capital budgeting was developed to overcome shortfalls in the net present value method. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
As part of a union negotiation agreement, the United Clerical Workers Union conceded to be paid every two weeks instead of every week. A major firm employing hundreds of clerical workers had a weekly payroll of $1,000,000 and the cost of short-term funds was 12 percent. The effect of this concession was to delay clearing […]
Date: September 19th, 2020
Tangshan Mining was extended credit terms of 3/15 net 30 EOM. The cost of giving up the cash discount, assuming payment would be made on the last day of the credit period, would be ________. If the firm were able to stretch its accounts payable to 60 days without damaging its credit rating, the cost […]
Date: September 19th, 2020
If a firm purchases $1,000 of inventory on credit, this should have the following change on the balance sheet: A) a $1,000 decrease in inventory and a $1,000 increase in retained earnings. B) a $1,000 increase in inventory and a $1,000 decrease in cash. C) a $1,000 increase in inventory and a $1,000 increase in […]
Date: September 19th, 2020
