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1. FIN 370 Final Exam NEW
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2. FIN 370 Final Exam NEW
1. Which of these provide a forum in which demanders of funds raise funds
by issuing new financial instruments, such as stocks and bonds?
2. Which of these does NOT perform vital functions to securities markets of
all sorts by channeling funds from those with surplus funds to those with
shortages of funds
3. Which of these statements is true regarding divisional WACC?
4. Which financial statement reports the amounts of cash that the firm
generated and distributed during a particular time period?
5. You are trying to pick the least-expensive machine for your company. You
have two choices: machine A, which will cost $50,000 to purchase and which will
have OCF of -$3,500 annually throughout the machine's expected life of three
years; and machine B, which will cost $75,000 to purchase and which will have
OCF of -$4,900 annually throughout that machine's four-year life. Both machines
will be worthless at the end of their life. If you intend to replace whichever
type of machine you choose with the same thing when its life runs out, again and
again out into the foreseeable future, and if your business has a cost of
capital of 14 percent, which one should you choose?
6. Financial plans include which of the following?
7. Which of the following terms means that during periods when interest
rates change substantially, bondholders experience distinct gains and losses in
their bond investments
8. Which of these is used as a measure of the total amount of available
cash flow from a project?
9. The overall goal of the financial manager is to__________
10. A firm is expected to pay a dividend of $2.00 next year and $2.14 the
following year. Financial analysts believe the stock will be at their target
price of $75.00 in two years. Compute the value of this stock with a required
return of 10 percent.
11. When firms use multiple sources of capital, they need to calculate the
appropriate discount rate for valuing their firm’s cash flows as _____.
12. What are the tools available for the manager in financial planning
13. As new capital budgeting projects arise, we must estimate__________.
14. What are reasons for the firm to go abroad?
15. The Rule of 72 is a simple mathematical approximation for__________
16. Which of these is the term for portfolios with the highest return
possible for each risk level?
17. Which of the following can create ethical dilemmas between corporate
managers and stockholders?
18. Which financial statement shows the total revenues that a firm earns and
the total expenses the firm incurs to generate those revenues over a specific
period of time — generally one year?
19. Five years ago, Jane invested $5,000 and locked in an 8 percent annual
interest rate for 25 years (ending 20 years from now). James can make a 20-year
investment today and lock in a 10 percent interest rate. How much money should
he invest now in order to have the same amount of money in 20 years as Jane?
20. Which financial statement reports a firm's assets, liabilities, and
equity at a particular point in time?
21. Suppose that Model Nails, Inc.'s capital structure features 60 percent
equity, 40 percent debt, and that its before-tax cost of debt is 6 percent,
while its cost of equity is 10 percent. If the appropriate weighted average tax
rate is 28 percent, what will be Model Nails' WACC
22. What's the current yield of a 6 percent coupon corporate bond quoted at
a price of 101.70?
23. The top part of Mars, Inc.'s 2013 balance sheet is listed as follows (in
millions of dollars). What are Mars, Inc.'s current ratio, quick ratio, and cash
ratio for 2013?
24. Which of these is the process of estimating expected future cash flows
of a project using only the relevant parts of the balance sheet and income
statements?
25. Which of the following is a true statement?
26. Will's Wheels, Inc. reported a debt-to-equity ratio of 0.65 times at the
end of 2013. If the firm's total debt at year-end was $5 million, how much
equity does Will's Wheels have?
27. We commonly measure the risk-return relationship using which of the
following?

3. 28. Which of these ratios show the combined effects of liquidity, asset
management, and debt management on the overall operation results of the firm?
29. We can estimate a stock's value by__________
30. We call the process of earning interest on both the original deposit and
on the earlier interest payments