1.) You are currently earning 12% compounded semiannually. Your investment company is switching all accounts to daily compounding. What rate will give you the same effective annual rate of return as you are receiving now?
a. 10.83%
b. 10.97%
c. 11.66%
d. 11.89%
2.) A corporation has annual sales of $18 million, total assets of $4 million, a debt ratio of 40%, depreciation expense of $200,000, and a tax rate of 40%. The corporation's total stockholders' equity is equal to
a. $5,600,000.
b. $2,800,000.
c. $2,400,000.
d. $1,800,000.
3.) You charged $1,000 on your credit card for Christmas presents. Your credit card company charges you 26% annual interest, compounded monthly. If you make the minimum payments of $25 per month, how long will it take (to the nearest month) to pay off your balance?
a. 94 months
b. 79 months
c. 54 months
d. 40 months
4.) A corporate manager decides to build a new store on a corporate-owned lot that could be sold to a local developer for $250,000. The corporation purchased the lot for $50,000 twenty years ago. When determining the value of the new store project,
a. the cost of the lot is zero since the corporation already owns it.
b. the opportunity cost of the lot is $250,000 and should be included in calculating the value of the project.
c. the cost of the lot for valuation purposes is $50,000 because land does not depreciate.
d. the incremental cash flow should be the $50,000 original cost, less accumulated amortization.
5.) Baron, Inc. has total current assets of $1,200,000; total current liabilities of $500,000; and long-term assets of $800,000. How much is the firm's Total Liabilities & Equity?
a. $2,500,000
b. $1,300,000
c. $2,000,000
d. $1,800,000
6.) The primary goal of a publicly owned corporation is to ________.
a. maximize dividends per share
b. maximize shareholder wealth
c. maximize earnings per share after taxes
d. minimize shareholder risk
7.) Li Retailing reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; and Taxes = $300,000. Li's net profit margin is equal to
a. 25.67%.
b. 35.67%.
c. 36.67%.
d. 50.00%.