Bond and Student Answer

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1.Question :(TCO 1) The goal of financial management is to increase the:

Student Answer: future value of the firm's total equity.

book value of equity

dividends paid per share

current market value per share

number of shares outstanding, thereby increasing the market value of equity Instructor Explanation:Chapter 1, Page 10

Points Received:0 of 3
Comments:

2.Question :(TCO 1) When analyzing alternative capital structures for a firm, a financial manager must consider which of the following?

Student Answer: type of loan

amount of funds needed

cost of funds

mix of debt and equity

all of the above

Instructor Explanation:Chapter 1, Page 5, Week 1 Lecture

Points Received:3 of 3
Comments:

3.Question :(TCO 1) Market value is important to the financial manager because:

Student Answer: It reflects the value of the asset, based on generally-accepted accounting principles. Is a crucial component of the balance sheet, and can impact the financial statements. Market value reflects the amount someone is willing to pay today for an asset. The market value of an asset reflects its historical cost.

None of the above

Instructor Explanation:Chapter 2, Page 26

Points Received:3 of 3
Comments:

4.Question :(TCO 1) Which of the following is true regarding income statements?

Student Answer: It reveals the net cash flows of a firm over a stated period of time. It reflects the financial position of a firm as of a particular date. It records revenue only when cash is received for the product or service provided. It records expenses based on the recognition principle.

None of the above is a true statement.

Instructor Explanation:Chapter 2, Page 27-29

Points Received:3 of 3
Comments:

5.Question :(TCO1) Telemarket Inc. has sales of $625,000. They paid $43,000 in interest during the year and depreciation was $79,000. Administrative costs were $100,000 and other costs were $160,000. Assuming a tax rate of 35 percent, what is Telemarket’s taxable income?

Student Answer: $157,950

$322,000

$243,000

$200,000

Instructor Explanation:Chapter 2, Pages 27-28
Income Statements
Sales $625,000
Costs 260,000
Depreciation 79,000
EBIT $286,000
Interest 43,000
Taxable Income $243,000
Taxes 85,050
Net Income $157,950

Points Received:3 of 3
Comments:

6.Question :(TCO 1) Home Best Hardware had $315,000 in taxable income last year. Using the tax rates provided in Table 2.3, what is the marginal tax rate?

Student Answer: 35%

39%

34%

32%

Instructor Explanation:Chapter 2, Pages 32-33

The marginal tax rate is the tax rate on the next dollar of income. The company has net income of $315,000 and the 39 percent tax bracket is applicable to a net income of $335,000, so the marginal tax rate is 39 percent.

Points Received:3 of 3
Comments:

7.Question :(TCO 1) Pizza A had earnings after taxes of $390,000 in the year 2008 and 300,000 shares outstanding. In year 2009, earnings after taxes increased by 20 percent to $468,000 and 25,000 new shares were issued for a total of 325,000 shares. What is the EPS figure for 2008?

Student Answer: $1.30

$1.44

$0.77

$0.69

Instructor Explanation:Chapter 2 Pages 27-28

EPS = Earnings after taxes/shares outstanding = $390,000/300,000

Points Received:3 of 3
Comments:

8.Question :(TCO 1) An income statement:

Student Answer: reveals the net cash flows of a firm over a stated period of time.

reflects the financial position of a firm as of a particular date.

shows the revenue and expenses based...
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