FIN 370 Final Guide 1
For more course tutorials visit
1) The goal of the firm should be
2) An example of a primary market transaction is
3) According to the agency problem, _________ represent the principals of acorporation
4) Which of the following is a principle of basic financial management?
5) Another name for the acid test ratio is the
6) The accounting rate of return on stockholders’ investments is measured by
7) If you are an investor, which of the following would you prefer?
8) The primary purpose of a cash budget is to
9) Which of the following is a non-cash expense?
10) The break-even model enables the manager of a firm to
11) A zero-coupon bond
12) If you have $20,000 in an account earning 8% annually, what constant amount could you withdraw each year and have nothing remaining at the end of 5 years?
13) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?
14) The present value of a single future sum
15) Which of the following is considered to be a spontaneous source of financing?
16) Compute the payback period for a project with the following cash flows, if the company’s discount rate is 12%.Initial outlay = $450Cash flows: Year 1 = $325 Year 2 = $65 Year 3 = $100
17) For the NPV criteria, a project is acceptable if the NPV is __________, while for the profitability index, a project is acceptable if the profitability index is __________.
18) Which of the following is considered to be a deficiency of the IRR?
19) The firm should accept independent projects if
20) The most expensive source of capital is
21) The cost associated with each additional dollar of financing for investment projects is
22) The XYZ Company is planning a $50 million expansion. The expansion is to befinanced by selling $20 million in new debt and $30 million in new common stock. The before-tax required rate of return on debt is 9%, and the required rate of returnon equity is 14%. If the company is in...