Net Present Value

Topics: Net present value, Time value of money, Rate of return Pages: 8 (1886 words) Published: August 25, 2013
MGMT 640 Section 9056, Mid-term Exam Fall 2010
This exam consists of 33 multiple-choice questions. Enter your answers on the Answer tab of the Excel spreadsheet that has been provided. (The worksheet tabs are located at the bottom of your worksheet.) Put your calculations on the Calculations tab as evidence of your work. Your calculations will be used as evidence of your independent work only and will not be used for partial credit for incorrect answers. Change the Excel file name to include your name (i.e. “SmithJMidtermExam”) and submit it in the appropriate assignment folder in your WebTycho classroom before the end of the exam period. Submit only your answer sheet. 1.) Which of the following is an appropriate goal for the firm? a. revenue maximization

b. profit maximization
c. tax minimization
d. shareholder wealth maximization
2.) Which of the following is NOT one of the strategies incorporated in the Sarbanes-Oxley Act of 2002? e. attain greater board independence
f. dictate maximum compensation levels
g. establish compliance programs
h. establish ethics programs
3.) One reason for the existence of agency problems between managers and share holders is that i. there is a separation of ownership and management of the firm. j. managers know how to manage the firm better than shareholders. k. shareholders have unreasonable expectations about managerial performance. l. none of the above

4.) Which of the following is considered a hybrid organizational form? m. sole proprietorship
n. partnership
o. corporation
p. limited liability partnership
5.) Maddux, Inc., has completed its fiscal year and reported the following information. The company had current assets of $153,413, net fixed assets of $ 412,331, and other assets of $83,552. The firm also has current liabilities worth $65,314, long-term debt of $178,334, and common stock of $162,000. How much retained earnings does the firm have? a. $ 405,648

b. $243,648
c. $167,918
d. $573,566
6.) Tre-Bien Bakeries generated net income of $233,412 this year. At year end, the company had accounts receivables of $47,199, inventory of $63,781, and cash of $21,461. It also had accounts payables of $45,948 short-term notes payables of $11,417, and accrued taxes of $6,145. The net working capital of the firm is a. $68,931

b. $63,510
c. $69,655
d. none of the above
7.) Simplex Healthcare had net income of $5,169,306 after paying taxes at 34 percent. The firm had revenues of $20,433,770. Their interest expense for the year was $1,122,376, while depreciation expense was $2,079,112. What was the firm’s operating expenses excluding depreciation? a. $8,199,429

b. $9,032,853
c. $9,321,805
d. none of the above
8.) Trident Corporation had the following cash flows in the current year. Which one of the following is a financing activity cash flow? a. Preferred dividends to the tune of $330,000 paid to shareholders b. Rent on a warehouse amounting to $1.1 million

c. Purchase of $125,000 worth of five-year bonds issued by Towson Utilities d. Lease income received on a piece of land
9.) The major disadvantages of market-value accounting include a. the difficulty in estimating the current value for some assets. b. the difficulty in applying some of the valuation models used to estimate market values. c. the resulting numbers are potentially open to abuse.

d. All of the above are disadvantages of market-value accounting.

10.) Profitability ratios: Tigger Corp. has reported the financial results for year-end 2006. Based on the information given, calculate the firm’s gross profit margin and operating profit margin. Net sales = $5,120,000Net income = $778,321

Cost of goods sold = $2,715,334EBIT = $1,356,098
a. 34.7%;32.6%
b. 32.6%;18.72%
c. 34.7%;18.72%
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