Calculate the payback period (PP) for the cash flows provided in the table below. Note: The negative cash flow for year 0 is the initial investment for the project. Year Cash Flow 0 -$131,000 1 $187,000 2 $24,000 3 $10,000 A) 0.70 years B) 1 year C) 1.25 years D) 2.75 years ANSWER […]
Date: September 19th, 2020
Balance sheets and income statements connect through the retained earnings account. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The cost of debt is measured on an after-tax basis and reflects the rate that the firm would need to offer if it issued new debt today. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
If a firm does not have publicly traded debt and therefore does not have a yield to maturity as an estimate for its cost of debt, a common practice is to estimate the cost of debt by adding a premium to the rate on: A) the cost of accounts payable. B) equity. C) long-term government […]
Date: September 19th, 2020
Accounts payable are spontaneous secured sources of short-term financing that arise from the normal operations of a firm. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Ajax enterprises, Inc has the following income statement items: sales of $48,250,000; operating expenses of $10,225,000; cost of goods sold of $32,025,000; and interest expense of $650,000. If the firm’s income tax rate is 34%, what is the amount of the firm’s income tax liability? A) $1,665,000 B) $2,040,000 C) $1,819,000 D) $1,385,000 […]
Date: September 19th, 2020
A constant-payout-ratio dividend policy is based on the payment of a certain percentage of earnings to owners in each dividend period. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Two firms, Sunny Inc, and Rainy Inc, are alike in every way. They sell the same products in the same markets for the same price and have equally good reputations. In fact, they even have identical ROEs. If Rainy Inc however, has a higher leverage ratio, then we can conclude that: A) Rainy Inc. shareholders […]
Date: September 19th, 2020
A firm that has a large percentage of ________ investors may pay out a lower percentage of its earnings as dividends. A) wealthy B) domestic C) middle-income D) international ANSWER A
Date: September 19th, 2020
Based on the selected financial information for Coffeeberry Coffeehouse, calculate net income for 2012. A) $100 B) $900 C) $500 D) $300 ANSWER B Explanation: B) NI = Div + Addition to R/E = $700 + ($6,350 – $6,150 ) = $900.
Date: September 19th, 2020
