WPM, Inc. has current assets of $8,000,000, current liabilities of $4,000,000, inventory of $1,320,000, and sales of $12,000,000. What is the acid test ratio? A) 0.1 B) 1.67 C) 0.22 D) 2.0 ANSWER B
Date: September 19th, 2020
Betty borrows $60,000 at 12 percent compounded annually. The loan is to be repaid in five equal annual end-of-year installments. How much must each loan payment be? What will be an ideal response? ANSWER $16,644.58, based on PVA = $60,000; N = 5; I = 12%; PMT = $16,644.58
Date: September 19th, 2020
A positive contribution to savings must lead to an increase in assets, a decrease in liabilities, or a combination of each. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
You are considering an investment in a U.S. Treasury bond but you are not sure what rate of interest it should pay. Assume that the real risk-free rate of interest is 1.0%; inflation is expected to be 1.5%; the maturity risk premium is 2.5%; and, the default risk premium for AAA rated corporate bonds is […]
Date: September 19th, 2020
If you were able to invest $2,500 at a rate of 6.40% for six months, how much money would you have at the end of that period? A) $2,349.62 B) $2,423.65 C) $2,578.76 D) $2,660.00 ANSWER C Explanation: C) FV = PV(1 + r)^n = $2,500 * (1.064 )^0.50 = $2,578.76.
Date: September 19th, 2020
Which of the following forms of organizations have earnings that are taxed twice, once as business income and once as personal income, when earnings are distributed to the owners in the form of dividends? A) Corporations B) General partnerships C) Limited partnerships D) Both A and C ANSWER A
Date: September 19th, 2020
Which of the following does NOT provide an indication of liquidity? A) quick ratio B) debt ratio C) average collection period D) inventory turnover ANSWER B
Date: September 19th, 2020
Under the discount method for calculating monthly payments on a consumer loan, A) the lender deducts the interest to be paid on the loan from the credit extended you at the beginning of the loan. B) you deduct the down payment on the sale from the final monthly payment. C) the lender reduces the monthly […]
Date: September 19th, 2020
Which of the following did NOT contribute to the Great Recession of 2007-2009? A) The collapse of the U.S. housing market. B) The tremendous growth of the sub-prime lending market. C) The liquidity crisis that resulted when banks became unwilling to lend into a collapsing market. D) All of the above contributed to the Great […]
Date: September 19th, 2020
Which of the following forms of business organization has the greatest ability to attract new capital? A) Sole proprietorship B) “C” Corporation C) General partnership D) “S” Corporation ANSWER B
Date: September 19th, 2020
