Question

The 2015 balance sheet of Global Tours showed current assets of $1,360 and current liabilities of $940. The 2016 balance sheet showed current assets of $1,640 and current liabilities of $1,140. What was the change in net working capital for 2016?

$80 |
||

$880 |
||

$920 |
||

$190 |
||

$170 |

Bonner Collision has shareholders' equity of $141,800. The firm owes a total of $126,000 of which 60 percent is payable within the next year. The firm net fixed assets of $161,900. What is the amount of the net working capital?

$75,600 |
||

$30,300 |
||

$25,300 |
||

$111,500 |
||

$86,300 |

Your sister deposited $5,000 today at 8.5 percent interest for 5
years. You would like to have just as much money at the end of the
next 5 years as your sister will have. However, you can only earn 7
percent interest. How much more money must you deposit today than
your sister did if you are to have the same amount at the end of
the 5 years?

$387.78 |
||

$321.19 |
||

$360.43 |
||

$401.21 |
||

$413.39 |

You are scheduled to receive annual payments of $5,100 for each of the next 7 years. The discount rate is 10 percent. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each year?

$2,483 |
||

$2,804 |
||

$2,721 |
||

$2,513 |
||

$2,727 |

Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?

corporate breakdown |
||

consideration |
||

articles of incorporation |
||

agency conflict |
||

legal liability |

Which one of the following terms is defined as the mixture of a firm's debt and equity financing?

capital investing |
||

working capital management |
||

capital structure |
||

cash management |
||

capital budgeting |

*Modern Motors Accessories* had annual sales of
$1,000,000 last year (December 31, 2017). The company’s cost of
goods sold (COGS) accounted for 75% of sales and is expected to be
at the same level for the next few years. Its annual depreciation
for last year was $50,000 and is not likely to change if production
is increased or decreased. The company’s annual interest expense on
long-term borrowings was $150,000 and these loans will remain in
their books at the same level and on same terms for two more years.
The company’s goal is to double its net income for this year ending
on December 31, 2018.

The forecast net income for 2018 (desired goal) is $

The forecast sales for accomplishing this goal is $

You would like to have $75,000 towards college education for your child 17 years from now. How much money must you set aside today for this purpose if you can earn 8 percent on your investments?

$32,488.37 |
||

$18,388.19 |
||

$29,311.13 |
||

$20,270.17 |
||

$28,417.67 |

Which of the following questions are addressed by financial
managers?

I. How should a product be marketed?

II. Should customers be given 30 or 45 days to pay for their credit
purchases?

III. Should the firm borrow more money?

IV. Should the firm acquire new equipment?

I, II, and III only |
||

I and IV only |
||

I, II, III, and IV |
||

II and III only |
||

II, III, and IV only |
||

A firm has common stock of $6,200, paid-in surplus of $9,100, total liabilities of $8,400, current assets of $5,900, and fixed assets of $21,200. What is the amount of the shareholders' equity?

$23,700 |
||

$18,700 |
||

$35,500 |
||

$15,300 |
||

$6,900 |

Kaylor Equipment Rental paid $75 in dividends and $511 in interest expense. The addition to retained earnings is $418 and net new equity is $500. The tax rate is 35 percent. Sales are $15,900 and depreciation is $680. What are the earnings before interest and taxes?

$1,269.46 |
||

$589.46 |
||

$1,331.54 |
||

$1,951.54 |
||

$1,949.46 |

You are comparing two annuities with equal present values. The applicable discount rate is 8.75 percent. One annuity pays $5,000 on the first day of each year for 20 years. How much does the second annuity pay each year for 20 years if it pays at the end of each year?

$5,438 |
||

$5,211 |
||

$5,267 |
||

$5,309 |
||

$5,390 |

Which one of the following functions should be the responsibility of the controller rather than the treasurer?

customer credit approval |
||

payment to a vendor |
||

equipment purchase analysis |
||

income tax returns |
||

daily cash deposit |

You collect old coins. Today, you have two coins each of which is valued at $300. One coin is expected to increase in value by 6 percent annually while the other coin is expected to increase in value by 4.5 percent annually. What will be the difference in the value of the two coins 15 years from now?

254.24 |
||

$208.04 |
||

$138.38 |
||

$241.79 |
||

$280.15 |

The Design Team just decided to save $1,500 a month for the next 5 years as a safety net for recessionary periods. The money will be set aside in a separate savings account which pays 4.5 percent interest compounded monthly. The first deposit will be made today. What would today's deposit amount have to be if the firm opted for one lump sum deposit today that would yield the same amount of savings as the monthly deposits after 5 years?

$80,459.07 |
||

$81,548.20 |
||

$81,068.18 |
||

$80,760.79 |
||

$81,068.18 |

Theresa adds $1,500 to her savings account on the first day of each year. Marcus adds $1,500 to his savings account on the last day of each year. They both earn 6.5 percent annual interest. What is the difference in their savings account balances at the end of 35 years?

$12,219 |
||

$12,093 |
||

$12,113 |
||

$12,127 |
||

$12,211 |

When you retire 40 years from now, you want to have $1.2 million. You think you can earn an average of 12 percent on your investments. To meet your goal, you are trying to decide whether to deposit a lump sum today, or to wait and deposit a lump sum 2 years from today. How much more will you have to deposit as a lump sum if you wait for 2 years before making the deposit?

$3280.78 |
||

$2,319.47 |
||

$2,891.11 |
||

$3,406.78 |
||

$1,414.14 |

Suppose you are given the following information for Bayside Bakery: sales = $30,000; costs = $15,000; addition to retained earnings = $4,221; dividends paid = $469; interest expense = $1,300; tax rate = 30 percent. What is the amount of the depreciation expense?

$7,000 |
||

$9,500 |
||

$4,820 |
||

$8,180 |
||

$5,500 |

Which one of the following is a working capital management decision?

determining whether or not a project should be accepted |
||

determining the number of shares of stock to issue to fund an acquisition |
||

determining the amount of equipment needed to complete a job |
||

determining whether to pay cash for a purchase or use the credit offered by the supplier |
||

determining the amount of long-term debt required to complete a project |

Andre’s bakery has sales of $687,000 with cost of $429,000. Interest expense is $2600 and depreciation is $42,000. The tax rate is 35%. What is the net income?

44,450

124,550

82,550

86,450

42,750

Answer #1

I have answered questions 1,2,5,6.Hope this helps!

5) The conflict of interest between corporate shareholders and
corporate managers is called **agency conflict**. It
arises whenever the managers are not performing as per the best
interest of shareholders

6) Mixture of firms debt and equity is called **capital
structure**. It represents the percentage of each
contributing to the firms capital

a. If you set a goal to accumulate a total of 50,000 dollars ten
years from today for your child’s education. You decide to start to
deposit a fixed amount of money in your savings account, once each
year, ten times for the next ten years, beginning today. Assume
that the annual interest rate is 4%, how much do you have to
deposit each year.

You would like to have $73,000 in 14 years. To accumulate this
amount, you plan to deposit an equal sum in the bank each year that
will earn 9 percent interest compounded annually. Your first
payment will be made at the end of the year.
a. How much must you deposit annually to accumulate this
amount?
b. If you decide to make a large lump-sum deposit today
instead of the annual deposits, how large should the lump-sum
deposit be? ...

You would like to have $47,000in 9 years. To accumulate this
amount you plan to deposit each year an equal sum in the bank,
which will earn 8 percent interest compounded annually. Your first
payment will be made at the end of the year.
a. How much must you deposit annually to accumulate $47,000 in 9
years?
b. If you decide to make a large lump-sum deposit today instead
of the annual deposits, how large should this lump-sum deposit be?...

Your older sister has deposited $5,000 today at 8.5 percent
interest for 5 years. You would like to have just as much money at
the end of the next 5 years as your sister will have. However, you
can only earn 7 percent interest. How much more money must you
deposit today than your sister did if you are to have the same
amount at the end of the 5 years.
a. $321
b. $360
c. $387
d. $401
e....

1. Thomas Corp., has current assets of $8,500, net
fixed assets of $32,370, current liabilities of $6,700, and
long-term debt of $15,200. What is the value of the shareholders’
equity account for this firm? How much is net working capital?
2. Freddie’s Fish Farm, Inc., has sales of $725,000,
costs of $317,300, depreciation expense of $48,000, interest
expense of 28,000, and a tax rate of 21 percent. What is
the net income for
this firm?
3. Deprez, Inc., has...

Consider a bank with the following balance sheet:
Assets: Reserves $100K and Loans $1 million.
Liabilities: Checking Deposit $1 million. Net
worth: $______
imagine instead that 5% of the loan portfolio fails.
i) Show the updated balance sheet, including changes to loans
and net worth
ii) What is the leverage ratio now?
iii) If the maximum legal leverage ratio is 20, how much of its
assets (and liabilities) must the bank sell off, in order to be in
compliance?
iv)...

Lansing Company’s 2015 income statement and selected balance
sheet data (for current assets and current liabilities) at December
31, 2014 and 2015, follow. LANSING COMPANY Income Statement For
Year Ended December 31, 2015 Sales revenue $ 64,000 Expenses Cost
of goods sold 19,000 Depreciation expense 4,500 Salaries expense
8,000 Rent expense 2,500 Insurance expense 1,900 Interest expense
1,800 Utilities expense 1,100 Net income $ 25,200 LANSING COMPANY
Selected Balance Sheet Accounts At December 31 2015 2014 Accounts
receivable $ 3,700...

1. You would like to have $50,000 in 15 years. To accumulate
this amount you plan to deposit each year an equal sum in the bank,
which will earn 7% interest annually. Your first payment will be
made at the end of the year. o How much must you deposit annually
to accumulate this amount? o If you decide to make a large lump-sum
deposit today instead of the annual deposits, how large should this
lump-sum deposit be? o At...

You take out a $25,000 30 years mortgage with monthly payments
and a rate of 3.5%, monthly compounded. What is your monthly
mortgage payment?
You take out a $25,000 30 years mortgage with monthly payments
and a rate of 3.5%, monthly compounded. What is the loan balance by
the end of year 15?
Calculate the future value at the end of year 4 of an
investment fund earning 7% annual interest and funded with the
following end-of-year deposits: $1,500 in...

HYDRO COMPANY
Balance Sheet
December 31, 2015
Cash
$40,000
Current liabilities
$80,000
Accounts receivable (net)
80,000
10% Bonds payable
120,000
Inventory
130,000
Common Stock
200,000
Plant and equipment (net)
250,000
Retained earnings
100,000
Total assets
$500,000
Total Liabilities and Stockholders' Equity
$500,000
Sales revenues for 2015 were $800,000, gross profit was $320,000,
and net income was $36,000. The income tax rate was 40 percent. One
year ago, accounts receivable (net) were $76,000, inventory was
$110,000, total assets were $460,000, and...

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