The purpose of a reverse stock split is to ________. A) issue additional shares B) increase the dividend C) increase the price of a stock D) decrease trading activity ANSWER C
Date: September 19th, 2020
A ________ has an effect on a firm’s share price similar to that of a ________. A) stock repurchase; stock split B) stock dividend; stock split C) cash dividend; stock dividend D) cash dividend; stock split ANSWER B
Date: September 19th, 2020
What is the WACC for Bacon Signs Inc, if the after-tax cost of long-term debt is 6.3% and the before tax cost of equity is 10.4%. A) 8.02% B) 8.91% C) 9.58% D) Without a corporate tax rate, we cannot answer this question as written. ANSWER B Explanation: B) WACC = 6.3% * […]
Date: September 19th, 2020
Market values for equity are calculated as: A) the sum of the value of equity and accumulated retained earnings as found on the balance sheet. B) the price per share multiplied by the number of shares outstanding. C) the price per share multiplied by the number of shares outstanding plus the accumulated retained earnings. D) […]
Date: September 19th, 2020
In order to understand a firm’s current and anticipated financial position and needs, we must first: A) understand overall economic conditions. B) understand the industry in which it operates. C) understand the strengths and weaknesses of the firm itself. D) All of t he above. ANSWER D
Date: September 19th, 2020
The IRR rule states that a firm should accept any project with an internal rate of return greater than or equal to a pre-specified hurdle rate. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
It would be a financially sound decision to pay employees once every two weeks rather than once a month. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
How might inflation restrict the usefulness of the balance sheet as normally presented? What will be an ideal response? ANSWER Inflation may significantly change the market value of assets and liabilities and be representative of actual values nor replacement costs.
Date: September 19th, 2020
An implicit assumption of the IRR method is that any cash inflows generated in the earlier years can be reinvested at the rate of the IRR. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The process whereby every transaction or event has at least two accounting entries is known as: A) the accounting equation. B) ledger accounting. C) double-entry bookkeeping. D) the cash equation. ANSWER C
Date: September 19th, 2020
