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Corporate Finance question 1 answer below » 1. Which one of the following is a capital budgeting decision? A. determining how much debt should be borrowed from a particular lender *B. deciding whether or not to open a new store C. deciding when to repay a long-term debt D. determining how much inventory to keep on hand E. determining how much money should be kept in the checking account 2. What is the taxable income for 2008? 2008 Cost of goods sold $3,210 Interest $215 Dividends $160 Depreciation $375 Change in retained $360 earnings Tax rate 35% View complete question » 1. Which one of the following is a capital budgeting decision? A. determining how much debt should be borrowed from a particular lender *B. deciding whether or not to open a new store C. deciding when to repay a long-term debt D. determining how much inventory to keep on hand E. determining how much money should be kept in the checking account 2. What is the taxable income for 2008? 2008 Cost of goods sold $3,210 Interest $215 Dividends $160 Depreciation $375 Change in retained $360 earnings Tax rate 35% A. $360 B. $520 C. $640 D. $780 E. $800 3. You have some property for sale and have received two offers. The first offer is for $189,000 today in cash. The second offer is the payment of $100,000
today and an additional $100,000 two years from today. If the applicable discount rate is 9%, which offer should you accept and why? A. You should accept the $189,000 today because it has the higher net present value. B. You should accept the $189,000 today because it has the lower future value. C. You should accept the second offer because you will receive $200,000 total. You should accept the second offer because you will receive an extra $11,000. E. You should accept the second offer because it has a present value of $194,168.00. 4. What is the net present value of a project with the Following cash flows and a required return of 12%? Year Cash How 0 -$28,900 1 $12,450 2 $ 9,630 3 $ 2,750 A. -$287.22 B. -$177.62 C. $177.62 D. $204.36 E. $287.22 5. Kay’s Nautique is considering a project which will require additional inventory of $128,000 and will also increase accounts payable by $45,000 as suppliers
are willing to finance part of these purchases. Accounts receivable are currently $80,000 and are expected to increase by 10% if this project is accepted. What
is the initial project cash flow needed for net working capital? A. $75,000 B. $91,000 C. $99,000 D. $136,000 E. $181,000 6. To ascertain whether the accuracy of the variable cost estimate for a project will have much effect on the final outcome of the project, you should
probably’ conduct analysis. A. leverage B. scenario C. break-even D. sensitivity E. cash flow 7. Next year’s annual dividend divided by the current stock price is called the: A. yield to maturity. B. total yield. C. dividend yield. D. capital gains yield. E. earnings yield. 8. You bought 100 shares of stock at $20 each. At the end of the year, you received a total of $400 in dividends, and your stock was worth $2,500 total. What
was your total return? A. 20% B.45% C. 50% D. 90% E. None of the above 9. The principle of diversification tells us that: A. concentrating an investment in two or three large stocks will eliminate all of your risk. B. concentrating an investment in three companies all within the same industry will greatly reduce your overall risk. C. spreading an investment across five diverse companies will not lower your overall risk at all. D. spreading an investment across many diverse assets will eliminate all of the risk. E. spreading an investment across many diverse assets will eliminate some of the risk. 10. You are considering purchasing stock S. This stock has an expected return of 8% if the economy booms and 3% if the economy goes into a recessionary period.
The overall expected rate of return on this stock will: A. be equal to one-half of 8% if there is a 50% chance of an economic boom. B. vary inversely …
