Question #1(1 point)
Huffy Inc. manufactures a line of bicycles. Their average selling price is $200 per unit with a variable cost of $120 per unit. Huffy’s annual fixed expenses are $240,000 per year. What is the break-even point in units for the company?
5,000
4,000
3,000
2,000
Question #2(1 point)
A company expects to receive the following cash flows at the end of each respective period: Year 1 – $1,000; Year 2 – $1,200; Year 3 – $2,200; and then $1,300 each year for the next five years after (years 4 through 8). With a discount rate of 5%, what is the present value of the cash flows?
$8,429
$8,803
$7,262
$6,943
Question #3(1 point)
If shareholder wealth is measured by the market capitalization of the firm, what would be the total shareholder wealth of a firm that has 150,000 common shares outstanding and 25,000 preferred shares issued? Its current common stock price is $50.00, and its current preferred stock price per share is $25.00.
$8,750,000
$8,000,000
$7,500,000
$7,000,000
Question #4(1 point)
Huffy Inc. manufactures a line of bicycles. Their average selling price is $200 per unit with a variable cost of $120 per unit. Huffy’s annual fixed expenses are $240,000 per year. Calculate the company’s EBIT at 9,000 units.
$160,000
$800,000
$480,000
$0
Question #5(1 point)
In 2011, Whitetree Inc. had a net income of $240,000, depreciation expense of $30,000, a decrease in accounts receivable of $35,000, an increase in inventory of $20,000, a decrease in accounts payable of $25,000, an increase in plant and equipment of $200,000, an increase in bonds payable of $70,000, and $80,000 of common stock dividends paid. What is the net increase (decrease) in Whitetree Inc.’s cash flows?
net increase of $25,000
net increase of $50,000
net decrease of $25,000
net decrease of $50,000
Question #6(1 point)
Friedrich Inc. has total assets of $580,000, total liabilities of $210,000, a preferred stock obligation of $20,000, and 50,000 outstanding shares of common stock. What is Friedrich Inc.’s book value per share?
7.8
7.4
7.0
8.0
Question #7(1 point)
In 2012, Dunlop Corp. had sales of $1.5 million, a profit margin of 10%, common stock of $250,000 and retained earnings of $500,000. What was Dunlop’s return on equity?
20%
5%
15%
10%
Question #8(1 point)
We wish to accumulate $10,000 after 5 years. If we can secure an interest rate of 6%, how much must be set aside at the end of each of the five periods?
$1,470
$1,774
$1,528
$1,684
Question #9(1 point)
The following data can be found on Jorgonson Inc.’s balance sheet: Cash of $300,000; marketable securities of $120,000; accounts receivable of $1,000,000; inventory of $750,000; net plant and equipment of $900,000; and total current liabilities of $960,000. Calculate Jorgonson Inc.’s quick ratio.
2.26
3.20
1.48
2.42
Question #10(1 point)
Ludwig Corp. has $750,000 in assets and $250,000 of debt. They report net income of $125,000. What is the return on the stockholders equity?
18.3%
25.0%
16.7%
10.0%
Question #11(1 point)
Money markets refer to those markets dealing with securities that have a life of one year or less and capital markets refer to those markets where securities have a life greater than one year.
True
False
Question #12(1 point)
Assume a company anticipates selling 10,000 units a year. Each order will cost the company $40 to place; and the price per unit is $16 with a 20% carrying cost to maintain the average inventory. Please find the EOQ.
250
500
1000
750
Question #13(1 point)
A firm sells 60,000 units, and their fixed costs are $50,000, variable cost per unit is $4.00, and the price per unit is $5.00. If a firm has $2,000 in interest payments, what is the firm’s degree of combined leverage?
12.5
7.5
15.0
10.0
Question #14(1 point)
Manchester Building Inc. has beginning inventory of 25,000 units, will sell 100,000 units for the month, and desires to reduce ending inventory to 50% of beginning inventory. How many units should Manchester produce?
75,000
62,500
125,000
87,500
Question #15(1 point)
Inventory is generally considered less liquid than cash.
False
True
Question #16(1 point)
When a corporation uses the financial markets to raise new funds, the sale of securities is said to be made in the secondary market.
True
False
Question #17(1 point)
Assume that George will need $10,000 in eight years. How much will he need to deposit today if his bank can guarantee him an interest rate of 6%?
$6,274
$5,836
$7,234
$6,753
Question #18(1 point)
Assume an investor has $4,000. What is the worth after ten years if it grows at 6% each year?
$4,953
$4,386
$7,163
$5,234
