1. (TCO A) Which of the following does NOT always increase a company's market value? (Points : 5) Increasing the expected growth rate of sales Increasing the expected operating profitability (NOPAT/Sales) Decreasing the capital requirements (Capital/Sales)
Decreasing the weighted average cost of capital
Increasing the expected rate of return on invested capital 2. (TCO F) Which of the following statements is correct? (Points : 5) For a project with normal cash flows, any change in the WACC will change both the NPV and the IRR. To find the MIRR, we first compound cash flows at the regular IRR to find the TV, and then we discount the TV at the WACC to find the PV. The NPV and IRR methods both assume that cash flows can be reinvested at the WACC. However, the MIRR method assumes reinvestment at the MIRR itself. If two projects have the same cost, and if their NPV profiles cross in the upper right quadrant, then the project with the higher IRR probably has more of its cash flows coming in the later years. If two projects have the same cost, and if their NPV profiles cross in the upper right quadrant, then the project with the lower IRR probably has more of its cash flows coming in the later years. 3. (TCO D) The Ramirez Company's last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price? a. $41.58 b. $42.64
c. $43.71
d. $44.80
e. $45.92(Points : 20)

4. (TCO G) The ABC Corporation's budgeted monthly sales are $4,000. In the first month, 40% of its customers pay and take the 3% discount. The remaining 60% pay in the month following the sale and don't receive a discount. ABC's bad debts are very small and are excluded from this analysis. Purchases for next month's sales are constant each month at $2,000. Other payments for wages, rent,...
...result would be nochange in stocks' prices.
The prices of all stocks would decline, but the decline would be greatest for highbeta stocks.
The prices of all stocks would increase, but the increase would be greatest for highbeta stocks.
Fi515 Midterm 2
. Question : (TCO A) Which of the following statements is CORRECT?
Student Answer: One of the disadvantages of incorporating a business is that the owners then become subject to liabilities in the event the firm goes...
...1. Question : (TCO A) Which of the following statements is CORRECT?
Student Answer: One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability.
It is generally easier to transfer one’s ownership interest in a partnership than in a corporation.
One of the advantages of the corporate form of organization is that it avoids double taxation.
One of the advantages of a corporation from a social standpoint is that every...
...Final Exam Page 1
1. (TCO A) Which of the following statements is NOT correct? (Points : 5) 
The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.
The corporate valuation model discounts free cash flows by the required return on equity.
The corporate valuation model can be used to find the value of a division.
An important step in applying the corporate valuation model is forecasting...
...72 Constant Growth Valuation
Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D1 = $1.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 15%. What is the value per share of Boehm’s stock?
P = D1/(rs – g)
Price = $1.50 / (0.15  0.07) = $18.75
74 Preferred Stock Valuation
Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the...
...FI515
Homework#1
Ashley Wright
Problems pg 79:
26
In its most recent financial statements, Newhouse Inc. reported $50 million of net income and $810 million of retained earnings. The previous retained earnings were $780 million. How much in dividends was paid to shareholders during the year?
Dividend = $780 million + $50 million  $810 million= $830 million  $810 million= $20 million
27
The Talley Corporation had a taxable income of $365,000 from operations after...
...FI515
Week 2 Homework
3.1
Greene Sisters has a DSO of 20 days. The company’s average daily sales are $20,000.
What is the level of its accounts receivable? Assume there are 365 days in a year.
Day Sales Outstanding= Receivables / Average Sales per day
AR = 20 X $20000 = $400,000
3.2
Vigo vacations has an equity multiplier of 2.5.The company’s assets are financed assets with some combination of longterm debt and common equity. What is the company’s debt ratio?...
...(26) Statement of Retained Earnings     
In its most recent financial statements, Newhouse Inc. reported $50 million of net income and $810 million of retained earnings. The previous retained earnings  
were $780 million. How much in dividends was paid to shareholders during the year? (Brigham 79)...