# Can someone explain how all the answers were found with work,

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Can someone explain how all the answers were found with work, showing proof please! Thanks. There are 9 multiple choice and 6 word problems. Practice Mid Term Exam – PONY .docx BUS 2224-01 Corporate Finance Practice Mid-Term Exam Chapters 1,2,3,4 & 17) Name _________________________ Multiple Guess (2 Points each) 1. A firm grants credit with terms of 2/5, net 20. The firm’s customers have ___ days to pay in order to receive a _____ percent discount. A. 2; 5 B. 5; 2 C. 15; 2 D. 20; 2 E. 30; 5 2. A firm has net working capital of \$5,200 and current assets of \$11,800. Total assets equal \$28,100. What is the book value of the firm if longterm debt is \$4,500? A. B. C. D. \$9,900 \$11,800 \$17,000 \$23,600 3. Alex wants to have \$48,000 five years from now to buy a new car. He wants to make one deposit today to fund this expenditure. How much does he have to deposit if he can 4.8% on his savings? A. B. C. D. \$24,908.16 \$35,255.20 \$37,969.50 \$38,211.40 4. A firm has sales of \$211,000, depreciation of \$24,000, interest expense of \$560, cost of goods sold of \$148,900, other costs of \$6,500, and a tax rate of 35%. What is the firm’s profit margin? A. 9.56% B. 11.01% C. 6.48% D. 4.93% 1 5. Electronics and More offers credit terms of 1/5, net 20. What is the effective annual rate on a \$12,000 purchase if you forgo the discount? A. B. C. D. E. 0 percent 8.59 percent 14.99 percent 27.71 percent 32.58 percent 6. Your goal is to earn an annual salary of \$75,000 three years from now. You expect to increase your salary by 3.5% annually. How much do you need to earn this year if you are going to reach your goal? A. B. C. D. \$65,887 \$67,646 \$68,420 \$70,311 7. A firm has a debt-equity ratio of 0.60. What is the equity multiplier if total equity is \$5,700? A. B. C. D. 0.40 0.48 1,40 1.60 8. Lisa has \$1,000 in cash today. Which one of the following investment options is most apt to double her money? A. 6 percent interest for 3 years B. 12 percent interest for 5 years C. 7 percent interest for 9 years D. 8 percent interest for 9 years E. 6 percent interest for 10 years 2 9. During the past year, Ernst Electrical Services paid \$36,800 in interest along with \$48,000 in dividends. The company issued \$130,000 of stock and \$100,000 of new debt. The company reduced the balance due on the old debt by \$225,000. What is the amount of the cash flow to creditors? A. -\$88,200 B. -\$51,400 C. \$161,800 D. \$211,600 E. \$231,500 10.So far this class has been: A. Great B. Better than a sharp stick in the eye C. A great way to spend part of my Tuesday and Thursday mornings D. Absolutely wonderful E. All of the above. Problems 1. (5 Points) The Noodle Place has total assets of \$123,800, a debt-equity of 0.65, and net income of \$7,100. What is the return on equity? Ans: ______9.46%__________ 2. (5 Points) ) (SHOW YOUR KEYSTROKES) You expect to receive \$12,000 at graduation one year from now. You plan on investing at 8 percent until you have \$100,000. How long will you wait to achieve your goal ? Ans: _____27.54 years____________ 3 3. (10 Points) Use the following financial information to answer this question. What are the values of the three components of the DuPont identity? Label each component accordingly. Component 1: ____14.9% ROS_______________ Component 2 ____.983 A/TO_______________ Component 3 ____2.86 E/M_______________ 4 3. (5 Points) (SHOW YOUR WORK) The Plaza Café has an operating cash flow of \$78,460, depreciation expense of \$8,960, and taxes paid of \$21,590. A partial listing of its balance sheet accounts is as follows: What is the amount of cash flow from assets (CFFA)? ANS: ___\$61,246___________________ Cash flow from assets = \$78,460 – (\$703,411 – \$687,810 + \$8,960) [(\$138,509 – \$91,516) – (\$141,680 – \$87,340)] = \$61,246 5 4. (5 Points) (SHOW KEYSTROKES) Today, Stacy is investing \$26,000 at 6 percent compounded annually, for four (4) years. How much will she have at the end of this period? ANS: \$32,824.40 2 Point Bon

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