George lends $200,000 for each new idea. George’s history is that he selects low-risk projects or ideas that hit 80% of the time
Result 93%
Part 1 of 1 – 90.0/ 100.0 Points
Question 1 of 20 5.0/ 5.0 Points
George lends $200,000 for each new idea. George’s history is that he selects low-risk projects or ideas that hit 80% of the time. What rate of return must each successful project pay George for him to break even?
A. 20.50%
B. 22.00%
C. 23.50%
D. 25.00%
Question 2 of 20 5.0/ 5.0 Points
Which of the statements below is TRUE?
A. The investment decision, although minor in comparison to the financing decision, is still an important consideration.
B. The financing decision, although minor in comparison to the investing decision, is still an important consideration.
C. The financing decision is minor in comparison to the investing decision and thus can be ignored.
D. The financing and investing decisions are equally important in terms of determining firm value.
Question 3 of 20 5.0/ 5.0 Points
Low-dividend clientele are preferred by firms because .
A. they pay more money per share of comparable stock than other types of investors
B. high-dividend clientele are more active shareholders
C. they are less critical of management decisions D. none of the above. Low dividend clientele are no more preferred than high-dividend clientele.
Question 4 of 20 5.0/ 5.0 Points
Financial leverage is the degree to which a firm or individual utilizes .
A. borrowed money to pay wages
B. borrowed money to pay dividends C. borrowed money to magnify equity earnings
D. borrowed money to diminish equity earnings
Question 5 of 20 5.0/ 5.0 Points
If we are using foreign currency for the NPV decision, all we have to do is restate all the in terms of present value and use the current exchange rate.
A. domestic incremental cash flow B. foreign incremental cash flow
C. salvage value
D. None of these
Question 6 of 20 5.0/ 5.0 Points
According to the text, which of the following four cash flows should be LAST in order of priority for a firm?
A. cash to pay off debts in a timely fashion
B. cash to maintain operations C. cash dividends
D. cash for reinvesting
Question 7 of 20 0.0/ 5.0 Points
Which of the statements below is FALSE?
A. Multinational capital budgeting is a straightforward application of the Net Present Value (NPV. model with one twist: we can do the analysis in either domestic currency or foreign currency.
B. If we are using foreign currency for the NPV decision, all we have to do is restate all the foreign incremental cash flow in terms of future value and use the current exchange rate.
C. In conducting a multinational NPV, one must be careful to avoid differences with rounding of exchange rates, discount rates, and cash flow to produce the exact same value.
D. With the foreign currency approach in NPV analysis, if we know the appropriate discount rate in the home country and the expected inflation rates in the two countries, we can determine the appropriate foreign discount rate.
Question 8 of 20 5.0/ 5.0 Points
The decision to pay a cash dividend is within the jurisdiction of . A. the board of directors of the firm
B. the firm’s largest labor union
C. the largest shareholders of the firm
Question 9 of 20 5.0/ 5.0 Points
The final distribution of cash to shareholders after a company has been sold off or discontinued operations is called a dividend.
A. complete B. liquidating
C. stock
D. optimal
Question 10 of 20 5.0/ 5.0 Points
The difficulties of managing international business operations stem from three special issues. Which of the choices below is NOT one of these?
A. political risk
B. differences in business practices C. social fads
D. cultural differences
Question 11 of 20 5.0/ 5.0 Points
Typically, shares of stock are stored in the vault of the brokerage firm and you, as owner, will not take physical possession. Under these circumstances the brokerage firm is the and you are the
.
A. street owner; settlement owner
B. settlement owner; street owner C. owner of record; beneficiary owner
D. beneficiary owner; owner of record
Question 12 of 20 5.0/ 5.0 Points
Which of the following is NOT a form of corporate dividend?
A. regular cash dividend
B. special cash dividend
C. stock dividend D. These are all forms of corporate dividends.
Question 13 of 20 5.0/ 5.0 Points
Anticipated cash inflows may fall in value if unexpected movements in the exchange rate hurt your ability to convert the foreign currency into domestic currency. This reduction in the conversion of future payments is called .
A. translation exposure B. transaction exposure
C. conversion exposure
D. operating exposure
Question 14 of 20 5.0/ 5.0 Points
Which of the following is NOT a reason for a high-dividend-payout policy?
A. convenient and direct deposit of cash dividend
B. avoidance of transaction costs for selling shares C. higher potential future returns for shareholders
D. cash payments today versus uncertain cash payments tomorrow
Question 15 of 20 5.0/ 5.0 Points
Specific issues related to cultural differences can arise in the management of a multinational enterprise. All of the following are related to cultural differences EXCEPT .
A. a requirement to have local management
B. issues with promotion of women into management positions
C. issues with observation of religious holidays D. nationalization of the assets of a company by the foreign government
Question 16 of 20 5.0/ 5.0 Points
Investors who wish to avoid paying taxes in the present are typically . A. low-dividend clientele
B. high-dividend clientele
C. drawn to firms that have erratic dividend policies
D. none of the above
Question 17 of 20 5.0/ 5.0 Points
A is a separate entity and in that capacity can borrow from banks, bondholders, preferred stockholders, and common shareholders.
A. limited partnership
B. sole proprietorship
C. government organization D. public company
Question 18 of 20 5.0/ 5.0 Points
“Individuals living off of their dividends streams do not like reductions in their quarterly payments.” This sounds like an argument for what type of dividend policy?
A. residual dividend policy B. sticky dividend policy
C. constantly declining dividend policy
D. none of the above
Question 19 of 20 5.0/ 5.0 Points
Businesses that operate in more than one country are commonly referred to as .
A. multi-American firms B. multinational firms
C. ultranational firms
D. worldwide firms
Question 20 of 20 0.0/ 5.0 Points
Capital structure refers to how the firm finances its operations and growth through a combination of .
A. equity types
B. security types
C. types of earnings D. types of debt
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Part 2 of 2 – Lesson 7 Questions 45.0/ 50.0 Points
Question 21 of 40 2.5/ 2.5 Points
Travel and Tow Trailers Inc. makes small trailers for light-duty towing behind SUVs and small pickup trucks. Its trailers typically sell for $2,500. Many of its customers have asked for credit terms to aid in purchasing the trailers. The firm’s finance department has estimated the following profile for its light- duty trailers and customer base:
Annual sales: 10,000 trailers
Annual production costs per trailer: $1,500
Lost sales if credit is not provided for customers: 2,000 trailers Default rate if all customers purchase on credit: 3.00%
What is the change in the profit margin if the firm moves from a cash-only policy to a credit policy? A. $1,250,000
B. $8,000,000 C. $9,250,000 D. $15,000,000
Question 22 of 40 2.5/ 2.5 Points
Using the information provided, what is the collection cycle for the firm? Perfect Purchase Electronics
Selected Income Statement Items, 2009
Cash Sales $1,500,000
Credit Sales $7,500,000
Total Sales $9,000,000
COGS $6,000,000
Perfect Purchase Electronics Selected Balance Sheet Accounts
12/31/2009 12/31/2008 Change
Accounts Receivable $270,000 $240,000 $30,000
Inventory $125,000 $100,000 $25,000
Accounts Payable
A. 6.84 days $110,000 $90,000 $20,000
B. 7.60 days
C. 10.34 days
D. 12.41 days
Question 23 of 40 2.5/ 2.5 Points
In terms of the float, the buyer of a product wants to and the seller wants to .
A. increase the collection float; decrease the disbursement float
B. decrease the disbursement float; decrease the collection float
C. decrease the collection float; decrease the disbursement float D. increase the disbursement float; decrease the collection float
Question 24 of 40 0.0/ 2.5 Points
BarnBurner Music, a music publishing firm located in Tennessee, bills its clients on the first of the month. For example, any sale made in the month of July is billed August 1 and is due September 1. Clients traditionally pay as follows: 50% at the end of the first month, 40% at the end of the second month, 8% at the end of the third month, and 2% default on their bills. If accounts receivable are collected as anticipated, what is the last month in which January billings will be collected?
First Quarter Actual Billings Second Quarter Anticipated Billings
January February March April May June
$88,000 $74,000 $96,000 $99,000 $82,000 $63,000
A. March
B. April C. May
D. June
Question 25 of 40 2.5/ 2.5 Points
Which of the following is NOT an inventory management technique?
A. ABC B. 6 SIGMA
C. JIT
D. EOQ
Question 26 of 40 2.5/ 2.5 Points
Jolly Roger Kite Company has a payment cycle of 17 days, a collection cycle of 31 days, and a production cycle of 12 days. What is the average cash conversion cycle for the Jolly Roger Company? Answer: C
A. 2 days
B. 36 days C. 26 days
D. 60 days
Question 27 of 40 2.5/ 2.5 Points
Using the information provided, what is the accounts receivable turnover for the firm?
Perfect Purchase Electronics
Selected Income Statement Items, 2009
Cash Sales $1,500,000
Credit Sales $7,500,000
Total Sales $9,000,000
COGS $6,000,000
Perfect Purchase Electronics Selected Balance Sheet Accounts
12/31/2009 12/31/2008 Change
Accounts Receivable $270,000 $240,000 $30,000
Inventory $125,000 $100,000 $25,000
Accounts Payable
A. 23.53 times $110,000 $90,000 $20,000
B. 29.41 times
C. 53.33 times
D. 60.00 times
Question 28 of 40 2.5/ 2.5 Points
Which of the following is NOT true of the cash conversion cycle?
A. It is the net period from the start of cash outflow for producing a product or service until the associated cash inflow materializes from the sale of that product or service.
B. Cash Conversion Cycle = Production Cycle + Collection Cycle – Payment Cycle C. Cash Conversion Cycle = Production Cycle + Collection Cycle + Payment Cycle
D. The cash conversion cycle essentially measures how quickly a company can convert its products or services into cash.
Question 29 of 40 2.5/ 2.5 Points
Perfect Purchase Electronics
Selected Income Statement Items, 2009
Cash Sales $1,500,000
Credit Sales $7,500,000
Total Sales $9,000,000
COGS $6,000,000
Perfect Purchase Electronics Selected Balance Sheet Accounts
12/31/2009 12/31/2008 Change
Accounts Receivable $270,000 $240,000 $30,000
Inventory $125,000 $100,000 $25,000
Accounts Payable $110,000 $90,000 $20,000
Using the information provided, what is the accounts payable turnover for the firm?
A. 15 times B. 60 times
C. 75 times
D. 90 times
Question 30 of 40 2.5/ 2.5 Points
A inventory item is an item that is not used in current operations but is serving a back-up role in case the current item fails during operation.
A. type C B. redundant
C. reticent
D. beta generation
Question 31 of 40 0.0/ 2.5 Points
Using the information provided, what is the accounts payable cycle for the firm? Perfect Purchase Electronics
Selected Income Statement Items, 2009
Cash Sales $1,500,000
Credit Sales $7,500,000
Total Sales $9,000,000
COGS $6,000,000
Perfect Purchase Electronics Selected Balance Sheet Accounts
12/31/2009 12/31/2008 Change
Accounts Receivable $270,000 $240,000 $30,000
Inventory $125,000 $100,000 $25,000
Accounts Payable
A. 4.06 days $110,000 $90,000 $20,000
B. 4.87 days
C. 6.08 days
D. 24.33 days
Question 32 of 40 2.5/ 2.5 Points
The begins at the time a firm first starts to make a product and lasts until the time the customer buys the product.
A. business operating cycle
B. accounts receivable cycle
C. cash conversion cycle D. production cycle
Question 33 of 40 2.5/ 2.5 Points
When a company deals only in cash, the cash conversion cycle becomes .
A. the collection cycle
B. the payable cycle
C. the production cycle
D. the collection cycle – the payable cycle
Question 34 of 40 2.5/ 2.5 Points
Travel and Tow Trailers Inc. makes small trailers for light-duty towing behind SUVs and small pickup trucks. Its trailers typically sell for $2,500. Many of its customers have asked for credit terms to aid in purchasing the trailers. The firm’s finance department has estimated the following profile for its light- duty trailers and customer base:
Annual sales: 10,000 trailers
Annual production costs per trailer: $1,500
Lost sales if credit is not provided for customers: 2,000 trailers Default rate if all customers purchase on credit: 3.00%
What is the profit if the firm has a credit policy?
Using the information provided, what is the length of the production cycle for the firm? Perfect Purchase Electronics
Selected Income Statement Items, 2009
Cash Sales $1,500,000
Credit Sales $7,500,000
Total Sales $9,000,000
COGS $6,000,000
Perfect Purchase Electronics Selected Balance Sheet Accounts
12/31/2009 12/31/2008 Change
Accounts Receivable $270,000 $240,000 $30,000
Inventory $125,000 $100,000 $25,000
Accounts Payable
A. 6.08 days $110,000 $90,000 $20,000
B. 7.60 days
C. 53.33 days
D. 6.84 days
Question 36 of 40 2.5/ 2.5 Points
Extending credit to a customer has three major components: .
A. a policy on how customers will qualify for credit, a policy on the payment plan allowed creditors, and a policy for collecting overdue bills
B. a policy on how customers will qualify for credit, a policy on paying commissions on sales, and a policy for collecting overdue bills
C. a policy on how customers will qualify for credit, a policy on the payment plan allowed creditors,
and a policy on accounting for depreciation
D. a policy on how customers will qualify for credit, a policy on accounting for depreciation, and a policy on paying commissions on sales
Question 37 of 40 2.5/ 2.5 Points
Travel and Tow Trailers Inc. makes small trailers for light-duty towing behind SUVs and small pickup trucks. Its trailers typically sell for $2,500. Many of its customers have asked for credit terms to aid in purchasing the trailers. The firm’s finance department has estimated the following profile for its light- duty trailers and customer base:
Annual sales: 10,000 trailers
Annual production costs per trailer: $1,500
Lost sales if credit is not provided for customers: 2,000 trailers Default rate if all customers purchase on credit: 3.00%
What is the dollar value of bad debts the firm expects to accumulate over a year? Given this amount, what is the maximum average amount per customer that the firm should spend on credit screening? A. $450,000; $45.00
B. $450,000; $56.25
C. $4,500,000; $450.00 D. $4,500,000; $$562.50
Question 38 of 40 2.5/ 2.5 Points
The production cycle .
A. is the period from the start of cash outflow for producing a product or service until the associated cash inflow materializes from the sale of that product or service
B. begins at the time a firm first starts to make a product and lasts until the time the customer buys the product
C. starts when production begins and ends with the collection of cash from the sale of the product
D. starts when the customer takes delivery of the product and ends when the firm receives payment for the product
Question 39 of 40 2.5/ 2.5 Points
Managing the relationship between current assets and current liabilities of a firm in order to improve the flow of funds is called .
A. the business operating cycle
B. the cash conversion cycle C. working capital management
D. the production cycle
Question 40 of 40 2.5/ 2.5 Points
Of the following, which is NOT an accurate statement about the Economic Order Quantity (EOQ) model?
A. The actual cost of the inventory item is ignored.
B. Costs are divided into two categories: the cost of ordering and the cost of storage.
C. EOQ is an attempt to determine the appropriate level of inventory.
D. The EOQ assumes the sales rate fluctuates with seasonal changes.
"Not answered?"
