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)
Peters 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. Geminis 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