1. Bass Company has the following data. Inventory conversion period =50 days Average collection period =17 days Payables deferral period =33 days Select one:

What is the present value (t = 0) if the discount rate is 12 percent? Select one: A. $3,277 B. $4,804 C. $5,302 D. $4,289 E. $2,804

Question 3 You deposit $1,000 in a savings account that pays 9 percent interest, compounded quarterly. How much will your account be worth in 6 years? Select one: A. $1, B. $1, C. $1, D. $1, E. $7,

Question 4 You can earn 8 percent interest, compounded annually. How much must you deposit today to withdraw $10,000 in 5 years? Select one: A. $5, B. $6, C. $ D. $3, E. none of the above

Question 5 If a 5-year annuity due has a present value of $1,000, and if the interest rate is 10 percent, what is the amount of each annuity payment? select one: A. $ B. $ C. $ D. $ E. $

Question 6 Assume that you will receive $2,000 a year in Years 1 through 5, $3,000 a year in Years 6 through 8, and $4,000 in Year 9, with all cash flows to be received at the end of the year. Select one: A. $ 9,851 B. $13,250 C. $11,714 D. $16,143 E. $12,741

Question 7 You can earn 15 percent interest, compounded monthly. How much must you deposit today to withdraw $4,000 in 10 years? Select one: A. $ B. $ C. $ D. $ E. $

## Question 2 You are given the following cash flows

Question 8 Brown Sons recently reported sales of $100 million, and net income equal to $5 million. The company has $70 million in total assets. Over the next year, the company is forecasting a 20 percent increase in sales. Since the company is at full capacity, its assets must increase in proportion to sales. The company also estimates find more that if sales increase 20 percent, spontaneous liabilities will increase by $5.6 million. If the company’s sales increase, its profit margin will remain at its current level. The company’s dividend payout ratio is 60 percent. Based on the AFN formula, how much additional capital must the company raise in order to support the 20 percent increase in sales? Select one: A. $ 2.0 million B. $ 6.0 million C. $ 8.4 million D. $ 9.6 million E. None of the above

Question 10 The dividend irrelevance theory, proposed by Miller and Modigliani, says that provided a firm pays at least some dividends, how much it pays does not affect either its cost of capital or its stock price. Select one: True False

## If you require a 12 percent rate of return, what is the present value of these cash flows?

Question 11 Kenney Corporation recently reported the following income statement for 2004(numbers are in millions of dollars): The company forecasts that its sales will increase by 10 percent in 2005 and its operating costs will increase in proportion to sales. The company’s interest expense is expected to remain at $200 million, and the tax rate will remain at 40 percent. The company plans to pay out 60 percent of its net income as dividends, the other 40 percent will be additions to retained earnings. What is the fore casted addition to retained earnings for 2005? Select one: A. $1,008 B. $1,260 C. $1,512 D. $1,572 E. None of the above

Question 12 Jane’s Wigs Inc. had the following balance sheet last year: Jane has just invented a non-slip wig for men which she expects will cause sales to triple from $10,000 to $30,000, increasing net income to $1,000. She feels that she can handle the increase without adding any fixed assets. (1) Will Jane need any outside capital if she pays out 80% of net income as dividends dividends? (2) If so, how much? Select one: A. Yes; $9,700 B. Yes; $2,600 C. Yes; $2,900 D. No; there will be a $2,400 surplus. E. Yes; $3,200