For August, Bletchley Blinds will have cash receipts of $97,000 and cash disbursements of $108,000. If its beginning cash is $5,000 and its desired reserve is $2,000, what will be its shortfall in cash for the month? A) There is no shortfall in cash but an excess of cash. B) -$11,000 C) -$8,000 D) -$6,000 […]
Date: September 19th, 2020
For April, Anderson Antiques will have cash receipts of $365,000 and cash disbursements of $370,000. If its beginning cash is $4,000 and its desired reserve is $3,000, what will be its shortfall in cash for the month? A) There is no shortfall in cash but an excess of cash. B) -$3,000 C) -$4,000 D) -$5,000 […]
Date: September 19th, 2020
Which of the below is a SOURCE of cash? A) Cash Sales B) Wages and Salaries C) Rent or Lease payments D) Dividend payments ANSWER Answer: A Explanation: A) The sources of cash (cash receipts or cash inflow) are: cash sales; payments received on accounts receivables (mainly credit sales); cash sales of equipment […]
Date: September 19th, 2020
Which of the below is a USE of cash? A) Credit Sales B) Retirement of debt (paying off loans and bonds) C) Bank loans D) Cash sales of equipment or other assets of the company ANSWER Answer: B Explanation: B) The sources of cash (cash receipts or cash inflow) are: cash sales; payments […]
Date: September 19th, 2020
Define “pure play” as it applies to assigning a beta to a project. Under what circumstances do you think the pure-play approach to assigning project betas would be particularly useful? What will be an ideal response? ANSWER Answer: Pure play is the art of determining the beta of an individual project by matching […]
Date: September 19th, 2020
The simplest application of assigning a beta to an individual project is called a “pure play,” in which a manager finds the beta of a firm whose sole business is similar to the project in question and assigns that beta to the project. Indicate whether the statement is true or false. ANSWER Answer: […]
Date: September 19th, 2020
Optimal capital structure is the capital structure at which the weighted average cost of capital is minimized, thereby maximizing a firm’s value. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
In an event study, what two steps does a researcher take to adjust for the valuation effects of other new (and simultaneously-revealed) value-relevant information, in order to isolate the valuation effect of a specific event? a. (i) using the market model to remove the effects of other firm-specific factors; and (ii) averaging abnormal returns across […]
Date: September 19th, 2020
Your firm has $2,000,000 available for investment in capital projects. Which combination of projects is the best, given this budget constraint? Project Initial Investment NPV A $750,000 $100,000 B $1,500,000 $125,000 C $500,000 $75,000 D $500,000 $35,000 A) B, C B) A, B, C C) A, B, C, D D) A, C, D […]
Date: September 19th, 2020
What could happen to “unused” dollars after a firm has chosen capital projects but still has remaining unallocated funds? A) The remaining funds may be invested at the “going rate” of the company. B) The remaining funds, if internally generated, may be paid back to shareholders as a dividend. C) If the remaining funds are […]
Date: September 19th, 2020
