A firm purchased goods on January 27 with a purchase price of $1,000 and credit terms of 2/10 net 30 EOM. The firm paid for these goods on February 9. The firm must pay ________ for the goods. A) $1,000 B) $980 C) $800 D) $900 ANSWER B
Date: September 19th, 2020
The author chooses to focus on four sections of a firm’s 10K report, the firm description, risk factors, current legal proceedings, and analysis of financial conditions. What important information can be obtained by looking at each of these sections? ANSWER The firm description provides an overall understanding of what the firm produces and […]
Date: September 19th, 2020
To estimate the after-tax cost of common stock you must: A) multiply the before-tax cost of equity by (1 – tax rate) B) multiply the before-tax cost of equity by (1 + tax rate) C) multiply the before-tax cost of equity by (tax rate) D) None of the above because common stock dividend payments are […]
Date: September 19th, 2020
The shareholder receiving a stock dividend receives ________. A) a share of common stock of equal value to their existing shares of common stock B) cash C) additional shares of common stock and cash D) nothing of value ANSWER D
Date: September 19th, 2020
Performance measures focus on the profitability, resource management, liquidity, and leverage position of a firm. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following adjustments to net income is NOT correct if you want to calculate cash flow from financing activities? A) Add dividends paid B) Add any increase in long-term borrowing C) Add proceeds from sale of stock D) Add any increase in short-term borrowing ANSWER A
Date: September 19th, 2020
Unlike bonds or preferred shares, common equity does NOT have any similar “guarantee” of returns. Rather, common stockholders are residual claimants. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The motive to pay stock dividend to retain cash to satisfy past-due bills, may result in a decline in market value. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A firm with a beta of 2.0 should: A) be forced to stop trading until the market perceives less risk. B) require twice the return on the market portfolio. C) require twice the market risk premium. D) require twice the risk-free rate of return. ANSWER C
Date: September 19th, 2020
Which of the following capital budgeting evaluation techniques does NOT have an available Excel function? A) NPV B) IRR C) MIRR D) Excel contains each of these functions. ANSWER D
Date: September 19th, 2020
