Quiz #12: FINA 3770 Section 0072 - Finance (Fall 2021 1)
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Quiz #12
Due
Nov 28 at 11:59pm
Points
10
Questions
10
Available
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Attempt 1 57 minutes
9 out of 10
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Score for this attempt: 9
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Submitted Nov 26 at 9:55am
This attempt took 57 minutes.
Description: This quiz covers the material in Chapter 16 of your text.
Instructions: Select the most appropriate answer. The following rules apply:
1. This quiz is a combination of 10 multiple choice and true/false questions.
2. Each 10 question quiz will be randomly drawn from a pool of questions.
3. You have 60 minutes to complete each quiz attempt, at which time the quiz will close.
4. You may take the quiz as many times as you desire.
5. You must obtain a score of at least 70% in order to progress to the next quiz.
6. Your recorded quiz score will the highest score from all attempts.
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1 / 1 pts
Question 1
A firm should scale back its projected level of operations if the funds required to
meet the forecasted sales are readily available.
True False It is possible that the funds required to meet the sales forecast simply cannot be obtained. If so, it is better to know this in advance and to scale back the projected level of operations. See 16-4: Using Leverage and Forecasting for Control
1 / 1 pts
Question 2
If a firm that has fixed costs in its operations does not meet its forecasted sales level,
its operating leverage will result in a magnified decrease in net income compared to
what is expected.
True If the forecasted sales level is not met, then the production facilities might be expanded too greatly, inventories might be built up too quickly, and so on, and the end result might be that the firm will su
ff
er a magnified income loss. See 16-4: Using Leverage and Forecasting for Control
False 1 / 1 pts
Question 3
Accounts that "naturally" fluctuate with changes in routine business operations
affect internally generated funds, which are generally referred to as spontaneously
generated funds.
False True In general, current liabilities that change naturally (spontaneously) with changes in sales provide spontaneously generated funds that tend to change at the same rate as sales. See 16-1: Projected (Pro Forma) Financial Statements
1 / 1 pts
Question 4
Operating breakeven analysis deals with the:
assets and liabilities forecasted in the pro forma balance sheet.
net cash flows from operations shown on the statement of cash flows.
noncash items included in operating activities.
revenues and expenses associated with a firm's normal production and
selling operations.
Correct. Operating breakeven analysis deals only with the upper portion of the income statement. This portion of the income statement generally is referred to as the operating section, because it contains only the revenues and expenses associated with the firm's normal production and selling operations. See 16-3: Financial Control-Budgeting and Leverage
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interest payments to bondholders and the dividend payments to preferred
stockholders.
1 / 1 pts
Question 5
The primary reason the income statement is forecast prior to the balance sheet in the
financial planning process is because ______ must be estimated.
current liabilities that change naturally with changes in sales
funds that must raise externally through new borrowing or by selling new
stock
the market value of stock in the coming year
the amount of retained earnings the company expects to generate during
the year
Correct. The income statement for the coming year is forecast to obtain an initial estimate of the amount of retained earnings (internal equity financing) the company expects to generate during the year. See 16-1: Projected (Pro Forma) Financial Statements
the total of cash flows from various activities during the year
1 / 1 pts
Question 6
If a firm that has a degree of operating leverage (DOL) greater than 1.0 experiences
a 1.0 percent change in _____, its earnings before interest and taxes (EBIT) will
change by _____1.0 percent.
earnings per share; greater than
net operating income; less than
sales; greater than
Correct. DOL is an index that measures the e
ff
ect a change in sales has on operating income or EBIT. See 16-3: Financial Control-
Budgeting and Leverage
net income; greater than
fixed costs; less than
1 / 1 pts
Question 7
Which of the following mathematical equations represents the operating breakeven
point, Q
, for a firm?
OpBEP
Contribution margin = Earnings before interest and tax
Sales = Gross profit margin
Total operating costs = Total variable costs + Total contribution margin
costs
Sales = Total variable costs + Total fixed costs
Correct. The operating breakeven point can be found by setting the total revenues equal to the total operating costs so that net operating income (NOI) is zero. See 16-3: Financial Control-
Budgeting and Leverage
Total operating costs = Contribution margin
1 / 1 pts
Question 8
Suppose that in the control phase of the financial planning process a firm discovers
it cannot raise the funds that are required to meet the forecasted sales. In this
situation, the firm should ______.
reformulate its plans to increase retained earnings and to decrease the
dividend payments to stockholders
scale back its projected level of operations
Correct. It is possible that the funds required to meet the sales forecast simply cannot be obtained. If so, it is better to know this in advance and to scale back the projected level of operations than to suddenly run out of cash and have operations grind to a halt. See 16-4: Using Leverage and Forecasting for Control
expand its plant and equipment to the level necessary to meet the sales
forecast
build up its inventory quickly
use available cash to repay as many outstanding loans as possible
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1 / 1 pts
Question 9
Considering each item independently and holding other things constant, which of
the following actions would reduce a firm's need for additional capital (additional
funds needed, AFN)?
Decrease the firm's days sales outstanding (DSO).
Correct. Days sales outstanding (DSO) is used to evaluate a firm's ability to collect its credit sales in a timely manner. Therefore, a lower DSO reduces the firm's need for additional capital. See 16-1: Projected (Pro Forma) Financial Statements
Increase the firm's dividend payout ratio.
Increase the firm's expected sales growth.
Decrease the firm's accrual accounts (e.g., accrued wages and taxes).
Decrease the firm's profit margin.
0 / 1 pts
Question 10
Incorrect
Incorrect
The degree of financial leverage (DFL) is defined as the percentage change in _____
that results from a given percentage change in earnings before interest and taxes
(EBIT).
net operating income (NOI)
sales
Incorrect. Financial leverage is the existence of fixed financial costs such as interest and preferred dividends. It a
ff
ects the financing section of the income statement. See 16-3: Financial Control-
Budgeting and Leverage
net income
earnings per share (EPS)
fixed financial costs
Quiz Score: 9
out of 10
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«Question 2 of 10
Goremann Corp (GC) has a total market value of $524 million. The market value of equity is $300 million and the company carries debt valued at $224 million. The before-tax cost of debt is 9
percent and the cost of equity is estimated at 14 percent. The statutory company tax rate is 35 percent. What is the weighted-average cost of capital for the company closest to?
O A. 9.34%.
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Question 1
What is the Payback Period for the following investment?
Year
1
2
3
4
5
O a. 3.77
Ob. 3.73
Oc. 3.89
Od. 3.96
Cash Out
$ (1,600,000)
(710,000)
Cash In
550,000
580,000
610,000
640,000
670,000
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You deposit $850 in an account paying an annual simple interest rate of 7.8%. Find the future value of the investment (in dollars) after 1 year.
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Calculate the simple interest due (in dollars) on a 40-day loan of $1,600 if the annual interest rate is 9%. (Use 360 days in 1 year.)
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You must evaluate the purchase of a proposed spectrometer for the R&D department. The purchase price of the spectrometer including modifications is
$140,000, and the equipment will be fully depreciated at the time of purchase. The equipment would be sold after 3 years for $32,000. The equipment would
require an $8,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm
$43,000 per year in before-tax labor costs. The firm's marginal federal-plus-state tax rate is 25%.
a. What is the initial investment outlay for the spectrometer after bonus depreciation is considered, that is, what is the Year 0 project cash flow? Enter your
answer as a positive value.…
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What are the future value and the interest earned if $4000 is invested for 3 years at 8% compounded quarterly? (Round your answers to the nearest cent.)
future value
24
interest earned
%24
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The future value of $200 received
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compounded semi-annually for
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Select one:
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b. $158
C. $253
d. $380
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OA. $18,200
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Buddy Company uses the allowance method to account for uncollectible receivables. At the beginning of the year,
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At the end of the current year, Accounts Receivable has
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for the year total $102,480,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $205,000.
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b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.
Accounts Receivable
Allowance for Doubtful Accounts
Bad Debt Expense
c. Determine the net realizable value of accounts receivable.
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Loans are evaluated in a two-step process with two resources. The processing times for the resources are 180 seconds and 99
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3. Employee salaries for the month of December totaling $7,300 will be paid on January 7, 2025.
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Consider the following situations for Shocker:
1. On November 28, 2024, Shocker receives a $3,450 payment from a customer for services to be rendered evenly over the next
three months. Deferred Revenue was credited on November 28.
2. On December 1, 2024, the company paid a local radio station $2,490 for 30 radio ads that were to be aired, 10 per month,
throughout December, January, and February. Prepaid Advertising was debited on December 1.
3. Employee salaries for the month of December totaling $7,300 will be paid on January 7, 2025.
Hint
Required:
Record the necessary adjusting entries for Shocker at December 31, 2024. No adjusting entries were made during the year. (If no
entry is required for a particular transaction/event, select "No Journal…
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Your grandfather has agreed to deposit a certain amount of money each year into an account paying 7.90 percent annually to help you
go to graduate school. Starting next year, and for the following four years, he plans to deposit $2,350, $8,600, $7,200, $6,600, and
$12,150 into the account. How much will you have at the end of the five years? (Round answer to 2 decimal places, e.g. 15.25.)
Future value at end of five years
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Round your answers to two decimal places, if necessary.
At the beginning of each of the last three years, Lucas put $7,000 from his earnings as a waiter into a
college savings account that earned 1.7% interest compounded annually. Now he will spend an
estimated $21,600 to attend his local community college for 2 years and not take out a student loan.
Complete the table to determine whether Lucas has saved enough money to attend community college.
2
3
Year
1
Beginning balance
$0
Amount deposited
$7,000
$7,000
$7,000
New balance
$7,000
$
Amount of interest earneds
Ending balance
$
Lucas (select)
v enough money to attend community college.
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Question 5 of 8
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ILLUCH
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Type of Donut
Chocolate Cream filled
Strawberry
Kale frosted
Blueberry
Cream filled surprise
Number purchased
4.00
Submit
1.00
10.00
9.00
4.00
Probability
Cumulative Probability
Based on the above table, you want to create a vlookup table. What value will go in the first column, in the row
that contains Kale Frosted?
Answer format: Percentage Round to: 0 decimal places (Example: 9%, % sign required. Will accept decimal
format rounded to 2 decimal places (ex: 0.09))
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Salma wants to save money to open a tutoring center. She buys an annuity with a monthly payment of $27 that pays 3.7% interest, compounded
monthly. Payments will be made at the end of each month. Find the total value of the annuity in 10 years.
Do not round any intermediate computations, and round your final answer to the nearest cent. If necessary, refer to the list of financial formulas.
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Answer Submitted:
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$12345.92
Correct Answer:
$3913.49
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- Question 15 pleasearrow_forwardI need typing clear urjent no chatgpt use i will give 5 upvotesarrow_forwardCrop a question SIM ? 11:00 AM A elearning.ju.edu.jo The future value of $200 received today and deposited at 8 percent compounded semi-annually for three years is Select one: a. $352 b. $158 C. $253 d. $380 Previous page Next page Quiz navigation 4. 6. Finish attempt. Go Time left 0:19:14 IIarrow_forward
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Publisher:Mcgraw-hill Education,
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Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
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Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
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Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education