21)
The return on equity for Dana Dairy Products for 2005 was (See Table 2.2)
21)
______
A)
0.6 percent.
B)
50 percent.
C)
5.6 percent.
D)
0.9 percent.
22)
On a purely theoretical basis, the NPV is the better approach to capital budgeting due to all the following reasons EXCEPT
22)
______
A)
that it measures the benefits relative to the amount invested.
B)
that it maximizes shareholder wealth.
C)
for the reasonableness of the reinvestment rate assumption.
D)
that there may be multiple solutions for an IRR computation.
Table 8.4Cuda Marine Engines, Inc. must develop the relevant cash flows for a replacement capital investment proposal. The proposed asset costs $50,000 and has installation costs of $3,000. The asset will be depreciated using a five-year recovery schedule. The existing equipment, which originally cost $25,000 and will be sold for $10,000, has been depreciated using an MACRS five-year recovery schedule and three years of depreciation has already been taken. The new equipment is expected to result in incremental before-tax net profits of $15,000 per year. The firm has a 40 percent tax rate.
23)
The tax effect on the sale of the existing asset results in (See Table 8.4)
23)
______
A)
$800 tax benefit.
B)
$1,000 tax liability.
C)
$6,000 tax liability.
D)
$1,100 tax liability.
24)
Nico owns 100 shares of stock X which has a price of $12 per share and 200 shares of stock Y which has a price of $3 per share. What is the proportion of Nico’s portfolio invested in stock X?
24)
______
A)
77%
B)
67%
C)
50%
D)
33%
25)
A firm has just ended its calendar year making a sale in the amount of $200,000 of merchandise purchased during the year at a total cost of $150,500. Although the firm paid in full for the merchandise during the year, it has yet to collect at year end from the customer. The possible problem this firm may face is
25)
______
A)
lack of cash flow.
B)
inability to receive credit.
C)
low profitability.
D)
high leverage.
26)
The tax liability of a corporation with ordinary income of $105,000 is ________.
26)
______
A)
$24,200
B)
$23,950
C)
$42,000
D)
$35,700
27)
In planning and managing the requirements of the firm, the financial manager is concerned with
27)
______
A)
the acquisition of fixed assets, allowing someone else to plan the level of current assets required.
B)
the mix and type of assets, the type of financing utilized, and analysis in order to monitor the financial condition.
C)
the mix and type of assets, but not the type of financing utilized.
D)
the type of financing utilized, but not the mix and type of assets.
28)
Foreign exchange risk refers to the risk created by ________.
28)
______
A)
the varying exchange rate between two currencies
B)
the fixed exchange rate between two currencies
C)
the potential nationalization of the MNC’s operations by a host government
D)
the potential seizure of an MNC’s operations in a host country
29)
The ________ the coefficient of variation, the ________ the risk.
29)
______
A)
higher; lower
B)
lower; higher
C)
lower; lower
D)
more stable; higher
30)
The 2002 Sarbanes-Oxley Act was designed to
30)
______
A)
eliminate the many disclosure and conflict of interest problems of corporations
B)
limit the compensation that could be paid to corporate CEOs
C)
provide uniform international accounting standards
D)
two of the above
31)
Prime-grade commercial paper will most likely have a higher annual return than
31)
______
A)
a Treasury bill.
B)
a preferred stock.
C)
an investment-grade bond.
D)
a common stock.
32)
Financial managers evaluating decision alternatives or potential actions must consider
32)
______
A)
risk, return, and the impact on share price.
B)
only return.
C)
only risk.
D)
both risk and return.
33)
After satisfying obligations to creditors, the government, and preferred stockholders, any remaining earnings will most likely be allocated to any of the following EXCEPT
33)
______
A)
retained by the firm for future investment.
B)
common shareholders as cash dividends.
C)
common shareholders as stock dividends.
D)
a combination of retained earnings and cash dividends.
34)
The ________ from the sale of a security are the funds actually received from the sale after ________, or the total costs of issuing and selling the security, which have been subtracted from the total proceeds.
34)
______
A)
gross proceeds; the after-tax costs
B)
net proceeds; the flotation costs
C)
gross proceeds; the flotation costs
D)
net proceeds; the after-tax costs
ScholarMatic: Explanation & Answer
Your ready answer from a verified tutor is just a click away for as little as $14.99
Click Order Now to get 100% Original Answer Customized to your instructions!
