Farida questions

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Question #3 (1 point)

Suppose a firm’s sales increased from $4 million in 2008 to more than $7 million in 2012. What has been the average annual growth rate in sales?

13%

15%

12%

14%

Question #4 (1 point)

The expected value of a normal distribution of prices for a stock is $30. If you are 99% sure that the price of the stock will be between $20 and $40, then what is the variance of the stock price.

$6.08

$26.03

$15.08

$36.95

Question #5 (1 point)

Assume today is January 1st. If a wealthy relative offered to set aside an initial $4,000 today, and then an additional $10,000 at the end of each year (the first being on December 31st of this year) for the next 5 years, how much would you have in your account after 5 years if the funds grew at 10%?

$61,051

$109,733

$67,493

$40,525

Question #6 (1 point)

Duane Corp. has taxable income of $90,000. What is the firm’s average tax rate? (Use Exhibit 3.6 in your text.)

22.3%

20.9%

34.0%

19.3%

Question #7 (1 point)

About 75 percent of all businesses in the United States are sole proprietorships.

True

False

Question #8 (1 point)

The following data can be found on Silverton Inc.’s 2012 balance sheet: Cash $45,000, Marketable Securities $70,000, Accounts Receivable $500,000, Inventory $525,000, Net Plant and Equipment $400,000, Accounts Payable $75,000, and Notes Payable $350,000. Please calculate Silverton Inc.’s Quick Ratio.

2.68

0.21

1.45

2.39

Question #9 (1 point)

Sainsbury Inc. has a beta of 0.8. If the expected market return is 13.5% and the risk-free rate is 6%, what is the appropriate required return of Sainsbury (using the CAPM)?

9.3%

11.1%

10.2%

12.0%

Question #10 (1 point)

The following data can be found on Stevenson 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 net working capital.

$2,110,000

$1,210,000

$460,000

$640,000

Question #11 (1 point)

In investment banking, the process by which the investment banker helps the company sell its new security issue is called

underwriting

marketing

distribution

origination

Question #12 (1 point)

We wish to accumulate $20,000 after 10 years. If we can secure an interest rate of 11%, how much must be set aside at the end of each of the ten periods?

$932

$945

$1196

$1079

Question #13 (1 point)

Assume you wanted to double the amount of money in your savings account in the next nine years. Approximately what interest rate would you need to earn to accomplish this?

8%

10%

12%

unable to determine based on the information provided

Question #14 (1 point)

Peter’s bank will pay him interest compounded quarterly (4 times a year) for 36 months (3 years). If peter deposits $3,000 and earns an annual 4% rate of return, how much will Peter have at the end of 36 months?

$3,380

$2,667

$3,375

$3,517

Question #15 (1 point)

Gemini Inc.’s debt increases while their assets and return on assets remain unchanged. Gemini’s return on equity will

increase

decrease

remain unchanged

cannot be determined from the information provided.

Question #16 (1 point)

Which of the following is considered a current liability?

inventories

accounts payable

net plant and equipment

all of the above

Question #17 (1 point)

Bright Light Company has $500,000 in assets and $200,000 of debt. They report net income of $50,000. What is their return on assets?

18.3%

16.7%

25.0%

10.0%

Question #18 (1 point)

Stephen wants to determine the most she should pay to purchase an ordinary annuity. It consists of cash flows of $1,000 at the end of each year for 10 years. He requires a minimum return of at least 10%.

$3,245

$6,145

$1,800

$9,000

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