APU FINC600 Week 8 Quiz (2016) Perfect Answer

Part 1 of 1 – Week 8 Required Quiz 100/ 100.0 Points
Question 1 of 25
The firm’s internal growth rate is defined as:
A. retained earnings/net income
B. retained earnings/net assets
C. retained earnings/total assets
D. none of the above
Question 2 of 25
4.0/ 4.0 Points
Briefly describe the traditional position on capital structure.
Question 3 of 25
4.0/ 4.0 Points
Minimizing the weighted average cost of capital (WACC) is the same as:
A. Maximizing the market value of the firm
B. Maximizing the book value of the firm
C. Maximizing the profits of the firm
D. Maximizing the liquidating value of the firm
Question 4 of 25
4.0/ 4.0 Points
The pecking order theory of capital structure predicts that:
A. If two firms are equally profitable the more rapidly growing firm will borrow more other things equal
B. Firms prefer equity to debt financing
C. Risky firms will end up borrowing less
D. Risky firms will end up borrowing more
Question 5 of 25
4.0/ 4.0 Points
The cash budget is the primary short-term financial planning tool. The key reasons a cash budget is created are:
I) To estimate your investment in assets
II) To estimate the size and timing of your new cash flows
III) To prepare for potential financing needs
A.I only
B.II and III only
C.II only
D.III only
Question 6 of 25
4.0/ 4.0 Points
Indirect costs of bankruptcy are borne principally by:
A. Bondholders
B. Stockholders
C. Managers
D. The federal government
Question 7 of 25
4.0/ 4.0 Points
Which of the following lists events in the chronological order from earliest to latest?
A. Record date declaration date ex-dividend date
B. Declaration date record date ex-dividend date
C. Declaration date ex-dividend date record date
D. None of the above
Question 8 of 25
4.0/ 4.0 Points
Cash inflow in cash budgeting comes mainly from:
A. Collection on accounts receivable
B. Short-term debt
C. Issue of securities
D. None of the above
Question 9 of 25
4.0/ 4.0 Points
APV method is most useful in analyzing:
A. large international projects
B. domestic projects
C. small projects
D. none of the above
Question 10 of 25
4.0/ 4.0 Points
Briefly explain the information content of share repurchase.
Question 11 of 25
4.0/ 4.0 Points
The after-tax weighted average cost of capital is determined by:
A. Multiplying the weighted average after tax cost of debt by the weighted average cost of equity
B. Adding the weighted average before tax cost of debt to the weighted average cost of equity
C. Adding the weighted average after tax cost of debt to the weighted average cost of equity
D. Dividing the weighted average before tax cost of debt to the weighted average cost of equity
Question 12 of 25
Dividends are decided by:
I) The managers of a firm
II) The government
III) The board of directors
A.I only
B.II only
C.III only
D.I and II only
Question 13 of 25
4.0/ 4.0 Points
Why is liquidity relevant?
Question 14 of 25
4.0/ 4.0 Points
In calculating the weighted average cost of capital the values used for D E and V are:
A. book values
B. liquidating values
C. market values
D. none of the above
Question 15 of 25
4.0/ 4.0 Points
In order to find the present value of the tax shields provided by debt the discount rate used is the:
A. cost of capital
B. cost of equity
C. cost of debt
D. none of the above
Question 16 of 25
4.0/ 4.0 Points
How are uses and sources of funds are calculated?
Question 17 of 25
4.0/ 4.0 Points
Given the following data:
Current assets = 500
Current liabilities = 250
Inventory = 200
Account receivables = 200
Calculate the current ratio:
A.2.0
B.1.0
C.1.5
D. None of the above
Question 18 of 25
4.0/ 4.0 Points
What are the primary reasons for a company to use debt in its capital structure?
Question 19 of 25
4.0/ 4.0 Points
The difference between Current Assets of a firm and its Current Liabilities is called.
A.Net worth
B.Net working capital
C. Gross working capital
D. None of the above
Question 20 of 25
4.0/ 4.0 Points
Given the following data:
Total current assets = $852
Total current liabilities = $406
Long-term debt = $442
Calculate the net working capital.
A.$446
B.$852
C.$410
D. None of the above
Question 21 of 25
4.0/ 4.0 Points
Which of the following investors have the strongest tax reason to prefer dividends over capital gains?
A. Pension funds
B. Financial institutions
C. Individuals
D. Corporations
Question 22 of 25
On January 2 Michigan Mining declared a $25-per-share quarterly dividend payable on March 9th to stockholders of record on February 9. What is the latest date by which you could purchase the stock and still get the recently declared dividend?
A. February 5
B. February 6
C. February 7
D. February 8
Question 23 of 25
4.0/ 4.0 Points
When weighted average cost of capital (WACC) is used to value a levered firm the interest tax shield is:
A. ignored.
B. considered by deducting the interest payment from the cash flows.
C. automatically considered because the after-tax cost of debt is used in the WACC formula.
D. none of the above
Question 24 of 25
4.0/ 4.0 Points
The main advantage of debt financing for a firm is:
I) no SEC registration is required for bond issue
II) interest expense of a firm is tax deductible
III) unlevered firms have higher value than levered firms
A.I only
B.II only
C.III only
D.I and III only
Question 25 of 25
4.0/ 4.0 Points
What are the common ratios used to measure liquidity of a firm?