BUSN 379 Quiz
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1. (TCO 1) Which of the following are capital structure concerns?
I. how to obtain short-term financing
II.the company’s financing mix
III. the cost of funds
IV. how and where to raise money (Points : 4)
2. (TCO 1) Market value is important to the financial manager because: (Points : 4)
3. (TCO 1) Use the following tax table to answer this question:
Taxable Income
Tax Rate
$0-
$50,000
15%
$50,001-
75,000
25
$75,001-
100,000
34
$100,001-
335,000
39
$335,001-
10,000,000
34
Riddell, Inc. earned $144,320 in taxable income for the year. How much tax does the company owe on this income? (Points : 4)
4. (TCO 3) Regional Bank offers you an APR of nine percent compounded quarterly, and Local Bank offers you an EAR of 9.15 percent for a new automobile loan. You should choose ______________ because its _______ is lower. (Points : 4)
5. (TCO 3) You deposited $11,000 in your bank account today. Which of the following will decrease the future value of your deposit, assuming that all interest is reinvested? Assume the interest rate is a positive value. Select all that apply: (Points : 4)
6. (TCO 3) Amy needs to save $20,000 in cash to buy a new car five years from today. She expects to earn 6.5 percent, compounded annually, on her savings. How much does she need to deposit today, if this is the only money she saves for this purpose? (Points : 4)
7. (TCO 3) Paper Pro needed a new store. The company spent $65,000 to refurbish an old shop and create the current facility. The firm borrowed 75 percent of the refurbishment cost at eight percent interest for 11 years. What is the amount of each monthly payment? (Points : 4)
8. (TCO 3) Which type of loan is comparable to the present value of a future lump sum? (Points : 4)
9. (TCO 3) Fanta Cola has $1,000 par value bonds outstanding at 12 percent interest. The bonds mature in 25 years. What is the current price of the bond if the YTM is 16 percent? Assume annual payments. (Points : 4)
10. (TCO 6) The market where new securities are offered is called the _____ market. (Points : 4)
11. (TCO 7) A taxpaying, levered firm’s optimal capital structure: (Points : 4)
.
12. (TCO 3) What is the approximate yield to maturity for a seven-year bond that pays 11 percent interest on a $1000 face value annually if the bond sells for $952? (Points : 4)
13. (TCO 8) Which of the following is true regarding bonds? (Points : 4)
14. (TCO 8) Two years ago, MorningStar Company issued seven percent, 25-year bonds and Track, Inc. issued seven percent, 10-year bonds. Since their time of issue, interest rates have increased. Which of the following statements is true of each firm’s bond prices in the market, assuming they have equal risk? (Points : 4)
15. (TCO 6) A sinking fund is an account managed by a bond trustee for the sole purpose of: (Points : 4)
