BUSN 379 Finance Final Exam
(TCO 8) Company insiders cannot earn excess profits based on the knowledge they have related to their employer if the financial markets are: (Points: 4)
(TCO 5) Royal Petroleum Co. can buy a piece of equipment that can be financed with debt at an after-tax cost of 8 percent and common equity at a cost of 20 percent. Assume debt and common equity each represent 50 percent of the firm’s capital structure. What is the weighted average cost of capital? (Points: 4)
(TCO 5, 6 and 7) An issue of common stock’s most recent dividend is $3.75. Its growth rate is eight percent. What is its price if the market’s rate of return is 16 percent? (Points: 4)
(TCO 5, 6 and 7) Which of the following is not true regarding the cost of debt? (Points: 4)
(TCO 5) Retained earnings has a cost associated with it because: (Points: 4)
new funds must be raised.
(TCO 4) A project has the following cash flows. What is the internal rate of return?
(TCO 5, 6 and 7) Which one of the following is a correct statement? (Points: 4)
Current tax laws favor debt financing.
(TCO 5, 6 and 7) The six percent preferred stock of FKH Manufacturing is selling for $62 a share. What is the firm’s cost of preferred stock, if the tax rate is 34 percent and the par value per share is $100? (Points: 4)
(TCO 2) Which one of the following occurs if a firm files for Chapter 7 bankruptcy, but does not generally occur if the firm files for Chapter 11 bankruptcy? (Points: 4)
(TCO 5) Which of the following statements is false regarding the cost of capital? (Points: 4)
(TCO 2) Select any actions that do not affect the cash account. (Points: 4)
(TCO 2) Which of the following statements is true? (Points: 4)
The optimal credit policy minimizes the total cost of granting credit.
(TCO 2) Which one of the following industries is most apt to have the shortest cash cycle? (Points: 4)
(TCO 2) Delphinia’s has the following estimated quarterly sales for next year. The accounts receivable period is 30 days. What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days.
(TCO 1) Which of the following statements is true regarding the goal of financial management? (Points: 4)