Use the information from Figure 13-2 and complete the missing information. What will be an ideal response? ANSWER Figure 13-2 Bartlett Packaging Inc., Economic Value Added (EVA) Amounts in $ thousands, except percentages Operating profit (EBIT) 15,000 tax rate (t) 30.00% EBIT × (1 – t) = NOPAT 10,500 Invested capital 25,000 Cost […]
The mortgage clause A) ensures that the lender receives insurance payouts for structural damage to the home. B) ensures that the face amount of the policy covers the remaining balance on the loan. C) ensures that you have an insurable interest in the home. D) provides for periodic insurance payments. ANSWER A
Which of the following statements is TRUE? A) Firms can grow externally through mergers and acquisitions. B) A MERGER involves the formation of a new economic unit from two or more units. C) An ACQUISITION usually involves a much larger firm acquiring control of a smaller firm. D) All of the above are true. […]
Joan insures her house (with a market value of $50,000, not including $10,000 for the foundation and lot) with a $30,000 insurance policy calling for 80% co-insurance. A fire causes $10,000 worth of structural damage valued at replacement cost. Considering only the information provided, what amount is she likely to collect from the insurance company? […]
ETFs are more tax efficient than mutual funds. Indicate whether the statement is true or false ANSWER TRUE
Traditional financial statements include only interest costs associated with any debt and NOT the return required or expected by equity holders, which is included in the EVA approach. Indicate whether the statement is true or false ANSWER TRUE
Which of the following is NOT an appropriate reason for a merger or acquisition? A) Economies of scale that result from the merger. B) The replacement of an inefficient management team. C) To promote “agency problems.” D) To reduce overlapping costs. ANSWER C
An inflation guard endorsement on a homeowner’s insurance policy A) periodically increases the face amount of dwelling protection to reflect changes market value. B) ensures that insurance premiums will not rise faster than the general price level. C) ensures that insurance premiums will not rise faster than the average price of a new home. D) […]
An advantage of exchange-traded funds is they occasionally can be purchased at significant discounts to book value. Indicate whether the statement is true or false ANSWER FALSE
The life insurance policy that permits both flexible premium payments and cash value investment selection is A) variable universal life. B) endowment life. C) universal life. D) modified whole life. ANSWER A
