FIN 571 Week 6 Final Exam – Which of the following is considered a hybrid organizational form

1. Which of the following is considered a hybrid organizational form?

Limited liability partnership

Partnership

Corporation

Sole proprietorship

2.  Which of the following is a principal within the agency relationship?

A shareholder

A company engineer

The board of directors

The CEO of the firm

3. Which of the following presents a summary of the changes in a firm’s balance sheet from the beginning of an accounting period to the end of that accounting period?

The statement of cash flows.

The statement of retained earnings.

The statement of working capital.

The statement of net worth

4. Teakap, Inc., has current assets of $ 1,456,312 and total assets of $4,812,369 for the year ending September 30, 2006. It also has current liabilities of $1,041,012, common equity of $1,500,000, and retained earnings of $1,468,347. How much long-term debt does the firm have?

$2,303,010

$2,123,612

$803,010

$1,844,022

5.   Gateway Corp. has an inventory turnover ratio of 5.6. What is the firm’s days’s sales in inventory?

64.3 days

57.9 days

65.2 days

61.7 days

6. Your firm has an equity multiplier of 2.47. What is its debt-to-equity ratio?

0.60

1.74

0

1.47

7.       Which of the following is not a method of “benchmarking”?

Utilize the DuPont system to analyze a firm’s performance.

Identify a group of firms that compete with the company being analyzed.

Conduct an industry group analysis

Evaluating a single firm’s performance over time.

8.  Jack Robbins is saving for a new car. He needs to have $ 21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target? (Round to nearest dollar.)

$22,680

$26,454

$16,670

$19,444

9.       Ferris, Inc., has borrowed from their bank at a rate of 8 percent and will repay the loan with interest over the next five years. Their scheduled payments, starting at the end of the year are as follows—$450,000, $560,000, $750,000, $875,000, and $1,000,000. What is the present value of these payments? (Round to the nearest dollar.)

$2,615,432

$2,431,224

$2,815,885

$2,735,200

10.   Ajax Corp. is expecting the following cash flows—$79,000, $112,000, $164,000, $84,000, and $242,000—over the next five years. If the company’s opportunity cost is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.)

$429,560

$477,235

$414,322

$480,906

 11.   Jayadev Athreya has started on his first job. He plans to start saving for retirement early. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent. How much will Jayadev have at the end of 45 years? (Round to the nearest dollar.)

$2,667,904

$3,594,524

$1,745,600

$5,233,442

12.   Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year? (Round to the nearest percent.)

16%

32%

40%

12%

13.   Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company’s bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)

$923

$972

$1,066

$1,014

14.   Next year Jenkins Traders will pay a dividend of $3.00. It expects to increase its dividend by $0.25 in each of the following three years. If their required rate of return is 14 percent, what is the present value of their dividends over the next four years?

$9.72

$12.50

$11.63

$13.50

15.   TuleTime Comics is considering a new show that will generate annual cash flows of $100,000 into the infinite future. If the initial outlay for such a production is $1,500,000 and the appropriate discount rate is 6 percent for the cash flows, then what is the profitability index for the project?

1.11

0.90

1.90

0.11

16.   What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?

the internal rate of return

the discounted payback

the modified internal rate of return

the profitability index

 17.   The WACC for a firm is 13.00 percent. You know that the firm’s cost of debt capital is 10 percent and the cost of equity capital is 20%. What proportion of the firm is financed with debt?

30%

70%

33%

50%

18.   If a company’s weighted average cost of capital is less than the required return on equity, then the firm:

is financed with more than 50% debt

is perceived to be safe

has debt in its capital structure

partnership

 19.   Gangland Water Guns, Inc., is expected to pay a dividend of $2.10 one year from today. If the firm’s growth in dividends is expected to remain at a flat 3 percent forever, then what is the cost of equity capital for Gangland if the price of its common shares is currently $17.50?

15.00%

12.00%

15.36%

14.65%

20.   A firm’s capital structure is the mix of financial securities used to finance its activities and can include all of the following except

stock.

bonds.

equity options.

preferred stock.

21.   Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 10 percent of the stock.

If Dynamo wishes to change its capital structure from 75 percent to 60 percent equity and use the debt proceeds to pay a special dividend to shareholders, how much debt should they issue?

$600

$225

$321

$375

 22.   Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its depreciation and amortization expenses amounted to $84 million. The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Turnbull has an enterprise value/EBITDA multiple of 5.40.

What is the enterprise value of Turnbull Corp.? Round to the nearest million dollars.

$1,315 million

$1,334 million

$1,787 million

$453.6 million

23.   Jockey Company has total assets worth $4,417,665. At year-end it will have net income of $2,771,342 and pay out 60 percent as dividends. If the firm wants no external financing, what is the growth rate it can support?

30.3%

27.3%

32.9%

25.1%

24. Which of the following cannot be engaged in managing the business?

a sole proprietor

a general partner

a limited partner

none of these

25. Which of the following does maximizing shareholder wealth not usually account for?

Government regulation.

Risk.

The timing of cash flows.

Amount of Cash flows.

26. The strategic plan does NOT identify

working capital strategies.

the lines of business a firm will compete in.

major areas of investment in real assets.

future mergers, alliances, and divestitures.

27. Firms that achieve higher growth rates without seeking external financing

none of these.

have a low plowback ratio.

have less equity and/or are able to generate high net income leading to a high ROE.

are highly leveraged.

28. Drekker, Inc., has revenues of $312,766, costs of $220,222, interest payment of $31,477, and a tax rate of 34 percent. It paid dividends of $34,125 to shareholders. Find the firm’s dividend payout ratio and retention ratio.

85%, 15%

45%, 55%

15%, 85%

55%, 45%

29. The cash conversion cycle

begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales.

estimates how long it takes on average for the firm to collect its outstanding accounts receivable balance.

shows how long the firm keeps its inventory before selling it.

begins when the firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures.

30. You are provided the following working capital information for the Ridge Company:

Ridge Company

Cash conversion cycle: What is the cash conversion cycle for Ridge Company?

129.9 days

46.4 days

83.5 days

38.3 days

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Lonsway Corporation acquired a computer server by agreeing to pay $100,000

Lonsway Corporation acquired a computer server by agreeing to pay $100,000 at the end of each year for the next 5 years. If an appropriate discount rate is 6%, what is the cash equivalent price of the server and how much interest will Lonsway pay by choosing the payment option? You must show calculations.

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The following information was taken from Zyski Enterprises accounts

The following information was taken from Zyski Enterprises accounts for the current year. From the data, calculate the Retained Earnings balance as of December 31, 2006.

Retained earnings, December 31, 2005, $537,000; Increase in accounts receivable during the year, $52,000; Decrease in cash during the year, $44,000; Net income for the year, $83,000; Cost of building purchased during the year; $250,000; Dividends declared and paid during the year, $70,000; Cost of goods sold during the year, $125,000.

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Pace Labs, Inc. provides mad cow disease testing for both state and federal

Pace Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the company’s customers are governmental agencies, prices are strictly regulated. Therefore, Pace Labs must constantly monitor and control its testing costs. Shown below are the standard costs for a typical test.

Direct materials (2 test tubes @ $1.50 per tube) $ 3.00

Direct labor (1 hour @ $30 per hour) 30.00

Variable overhead (1 hour @ $7 per hour) 7

Fixed overhead (1 hour @ $12 per hour) 12

Total standard cost per test $52.00

The lab does not maintain an inventory of test tubes. Therefore, the tubes purchased each month are used that month. Actual activity for the month of November 2014, when 1,500 tests were conducted, resulted in the following:

Direct materials (3,030 test tubes) $ 4,151

Direct labor (1,560 hours) 43,680

Variable overhead 9,510

Fixed overhead 17,535

Monthly budgeted fixed overhead is $16,440. Revenues for the month were $102,000, and selling and administrative expenses were $3,510.

Materials price variance $394Entry field with incorrect answer now contains modified data Entry field with correct answer
Materials quantity variance $45Entry field with correct answer Entry field with correct answer
Labor price variance $3120Entry field with correct answer Entry field with correct answer
Labor quantity variance $1800Entry field with correct answer Entry field with correct answer

 

Prepare an income statement for management.

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HiTech Products manufactures three types of remote-control devices

HiTech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.

Picture

The following information pertains to the three product lines for next year:

Picture

Under an activity-based costing system, what is the per-unit overhead cost of Deluxe?

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STRAYER MKT100 QUIZ 1 – The equation a buyer applies to assess a product’s value

Question 1

The equation a buyer applies to assess a product’s value is

value = monetary price – customer benefits.

value = customer costs – customer benefits.

value = customer benefits – customer costs.

value = customer benefits – monetary price.

value = customer benefits – time and effort.

Question 2

In managing customer relationships, the three primary ways profits can be obtained are by

acquiring new customers, enhancing the profitability of new customers, and shortening the duration of relationships with existing customers.

enhancing the profitability of existing customers, eliminating customers who provide smaller profits, and finding new customers.

extending the length of relationships with customers, cutting organizational costs, and enhancing the profitability of new customers.

eliminating long-term customers who have decreased purchases, finding new customers, and increasing sales to existing customers.

enhancing the profitability of existing customers, extending the duration of relationships with customers, and obtaining new customers.

Question 3

Marketing activities are

used by all sizes of organizations including for-profit, nonprofit, and government agencies.

limited to use by larger for-profit and nonprofit organizations.

implemented only to increase profits for the organization and to expand the scope of its customer base.

used by all types and sizes of businesses but are not used by nonprofit organizations.

used by small businesses and small nonprofit organizations the most.

Question 4

____ refers to minimizing the resources an organization must spend to achieve a specific level of desired exchanges.

Effectiveness

Productivity

Efficiency

Objectivity

Cost cutting

Question 5

From the 1920s to the 1950s, demand for manufactured goods decreased, leading to the ____ orientation.

production

market

revolutionary

sales

reduction

Question 6

A physical product you can touch is a(n)

service.

good.

idea.

concept.

philosophy.

Question 7

The three basic forms that a product can take are

markets, products, and images.

goods, ideas, and intangibles.

brands, services, and tangibles.

services, ideas, and goods.

ideas, services, and things.

Question 8

Marketing management is defined as a process of

maintaining an appropriate and efficient marketing mix for a target market.

establishing performance standards and evaluating actual performances against these standards.

providing products that satisfy customers’ needs through a coordinated set of activities.

facilitating satisfying exchanges between an organization and its customers.

planning, organizing, implementing, and controlling marketing activities.

Question 9

The marketing concept is a philosophy that states that an organization should try to satisfy customers’ needs and also

increase market share.

increase sales.

achieve the organization’s goals.

produce high-quality products.

coordinate its activities to increase production.

Question 10

Issues of inventory levels and storage costs are both concerns relating to the ____ variable of the marketing mix.

distribution

product

exchange

price

promotion

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Al Beck, president of Beck manufacturing, wants to determine the capacity of his facil­ity

Al Beck, president of Beck manufacturing, wants to determine the capacity of his facil­ity, which produces steering gears for auto manufacturers. He has asked you to sort through the data and determine the capacity of the system and how that capacity may be increased. The operation is a product layout that produces large numbers of nearly iden­tical products. The process includes milling, grinding, boring, drilling, and assembling, in that order. Each finished product requires one operation on each type of machine. For example, each finished part is processed on one of the five milling machines, one of the seven grinding machines, etc.

The facility runs two 8-hour shifts per day, with a third shift for maintenance. The indus­trial engineering department has provided you with the following data on present opera­tions. In addition, you have been told that assembly operations, while not unlimited, can be easily changed to meet the need.

Operation

Number of Machines

Run Time per Piece (min.)

% Reject Rate

Milling

5

2

3

Grinding

7

3

5

Boring

3

1

2

Drilling

6

2.5

7

 

1. Calculate the capacity of each machine center and the capacity of the system.
2. If Beck wants to expand capacity, where should he focus the company’s efforts? How much extra capacity can he get without causing another operation to become the bottleneck?
3. How may Mr. Beck expand capacity without purchasing new equipment? Be specific.

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At December 31, 2012, the Accounts receivable balance of Solar Energy Manufacturing (A+ Guaranteed)

At December 31, 2012, the Accounts receivable balance of Solar Energy Manufacturing is $170,000. The Allowance for doubtful accounts has a $10,100 credit balance. Solar Energy Manufacturing prepares the following aging schedule for its accounts receivable:

Accounts Receivable: 1-30 days 31-60 days 61-90 days over 90 days   

$170,000 $70,000 $50,000 $30,000 $20,000

Estimated % uncollectible 0.6% 3.0% 9.0% 40.0%

Requirements
R1.
Journalize the year-end adjusting entry for doubtful accounts on the basis of the aging schedule. Show the T-account for the Allowance for uncollectible accounts at December 31, 2012.
R2. Show how Solar Energy Manufacturing will report Accounts receivable on its December 31, 2012, balance sheet.

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Razmon’s Jewelers has accumulated the following budgeted overhead information (A+ Guaranteed)

Razmon’s Jewelers has accumulated the following budgeted overhead information (dollar amounts may include both fixed and variable costs):

Direct Labor Hours
2,000 hours 3,000 hours
  Maintenance $ 12,000 $ 17,000
  Depreciation 8,000 8,000
  Manager’s salary 45,000 45,000
  Indirect supplies 3,200 4,700
  Utilities 1,000 1,200
  Other 8,500 9,000

 

Use this information to create the overhead budget for 2,800 direct labor employee hours.

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First Apple Computers Company manufactures one product (A+ Guaranteed)

First Apple Computers Company manufactures one product. If its variable manufacturing cost is $18 per unit; total fixed manufacturing cost is $500,000: Required:

1) Calculate First Apple’s total manufacturing costs if it produces 10,000 units.

2) What would be the total cost per unit (including both fixed and variable costs) assuming that Best Apple produces 10,000 units?

3) Calculate First Apple’s total manufacturing costs if it produces 20,000 units.

4) What would be the total cost per unit assuming that First Apple produces 20,000 units?

5) Compare your answers from parts 2 and 4. If the cost per unit is different at 10,000 units than at 20,000 units, explain why.

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