FINANCE

Student Name (Type): ¬¬¬¬¬¬¬_______________________________________Class: FISV 2000 CRN40694-1

FISV2000 Finance

OPEN QUESTIONS/PROBLEMS (2 questions below):
Please write and explain in your own words your responses to the open-ended questions below. For any calculations, show your work to derive the quantitative result for credit and process to determine answer.

1) List and briefly describe the three general areas of responsibility for a financial manager (Chapter 1 Intro to Corporate Finance) (3 points).

2)Suppose a firmhas $311,000 Taxable Income in 2015. With the provided 2015 IRS Corporate Tax table below, please answer the following questions:

a) What is the marginal tax rate? (1 points)

b) What is the total 2015 Tax liability bill? (2 points)

c) What is the average tax rate? (2 points)

MULTIPLE CHOICE QUESTIONS/PROBLEMS(4 points each):
Please answer the following23multiple choice questions and CIRCLEyour answers on this exam for each question. You all allowed to write on this exam packet and you should SHOW ALL your calculation process steps for quantitative problems on the test to help keep you on track and easier to grade your work.

1) The controller of a corporation generally reports directly to the:
A. board of directors.
B. chairman of the board.
C. chief executive officer.
D. president.
E. CFO / vice president of finance.

2) Which one of the following statements concerning a sole proprietorship is correct?
A. A sole proprietorship is designed to protect the personal assets of the owner.
B. The profits of a sole proprietorship are subject to double taxation.
C. The owner of a sole proprietorship is personally responsible for all of the company’s debts.
D. There are very few sole proprietorships remaining in the U.S. today.
E. A sole proprietorship is structured the same as a limited liability company.

3) Corporations, and Public offerings of debt (corporate bonds) and equity (shares of stock) must be registered with which one of the following?
A. New York Board of Governors
B. Federal Reserve
C. NYSE Registration Office
D. Securities and Exchange Commission
E. Market Dealers Exchange

4) Which one of the following best describes the primary advantage of being a limited partner instead of a general partner?
A. tax-free income
B. active participation in the firm’s activities
C. no potential financial loss
D. greater control over the business affairs of the partnership
E. maximum loss limited to the capital invested

5) Which one of the following business types is best suited to raising large amounts of capital?
A. sole proprietorship
B. limited liability company
C. Corporation
D. general partnership
E. limited partnership

6) Which of the following are advantages of the corporate form of business ownership?

I. limited liability for firm debt
II. double taxation
III. ability to raise capital
IV. unlimited firm life

A. I and II only
B. III and IV only
C. I, III, and IV only
D. II, III, and IV only
E. I, II, III, and IV

7) Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?
A. increase in the amount of the quarterly dividend
B. decrease in the per unit production costs
C. increase in the number of shares outstanding
D. decrease in the net working capital
E. maximize/increase in the company’s stock (share) market value

8) Which of the following represent cash outflows from a corporation?
I. sell / issuance of securities (stocks and bonds)
II. payment of dividends
III. new loan proceeds from banks/creditors
IV. payment of government taxes

A. I and III only
B. II and IV only
C. I and IV only
D. I, II, and IV only
E. II, III, and IV only

9) Shareholder A sold shares of Maplewood Cabinets stock to Shareholder B. The stock is listed on the NYSE. This trade occurred in which one of the following?
A. primary, dealer market
B. secondary, dealer market
C. primary, auction market
D. secondary, auction market
E. secondary, OTC market

10) Which one of the following is an unintended result of the Sarbanes-Oxley Act?
A. More detailed and accurate financial reporting.
B. Increased management awareness of internal controls.
C. Corporations delisting from major exchanges.
D. Increased responsibility for corporate officers.
E. Identification of internal control weaknesses.

11) Which one of the following is a working capital management decision?
A. Determining the amount of equipment needed to complete a job.
B. Determining whether to pay cash for a purchase or use the credit offered by the supplier.
C. Determining the amount of long-term debt required to complete a project.
D. Determining the number of shares of stock to issue to fund an acquisition.
E. Determining whether or not a project should be accepted.

12) During 2015, RIT Corp. had sales of $565,600. Costs of goods sold, administrative and selling expenses, and depreciation expenses were $476,000, $58,800, and $58,800, respectively. In addition, the company had an interest expense of $112,000 and a tax rate of 35 percent. What is the operating cash flow for 2015? Ignore any tax loss carry-back or carry-forward provisions.

A. $17,920
B. $21,840
C. $30,800
D. $52,600
E. $77,840

13) Which one of the following statements related to the cash flow to creditors is correct?
A. If the cash flow to creditors is positive then the firm must have borrowed more money than it repaid.
B. If the cash flow to creditors is negative then the firm must have a negative cash flow from assets.
C. A positive cash flow to creditors represents a net cash outflow from the firm.
D. A positive cash flow to creditors means that a firm has increased its long-term debt.
E. If the cash flow to creditors is zero, then a firm has no long-term debt.

14) The book value of a firm is:
A. equivalent to the firm’s market value provided that the firm has some fixed assets.
B. based on historical cost.
C. generally greater than the market value when fixed assets are included.
D. more of a financial than an accounting valuation.
E. adjusted to the market value whenever the market value exceeds the stated book value.
15) The Blue Bonnet’s 2010 balance sheet showed net fixed assets of $2.2 million, and the 2011 balance sheet showed net fixed assets of $2.6 million. The company’s income statement showed a depreciation expense of $900,000. What was the amount of the net capital spending for 2011?

A. -$500,000
B. $400,000
C. $1,300,000
D. $1,700,000
E. $1,800,000

16) Nielsen Auto Parts had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411. During the year, assets with a combined book value of $6,943 were sold. Depreciation for the year was $42,822. What is the amount of net capital spending?

A. $33,763
B. $40,706
C. $58,218
D. $65,161
E. $67,408

Please Answer questions #17 to 23

17) Based on M&M Foods Inc. above, what is the change in the net working capital from 2014 to 2015, and is this a cash inflow or outflow from the firm?
A. -$175, inflow
B. -$70, outflow
C. -$175, outflow
D. -$70, inflow
E. $315, outflow

18) Based on M&M Foods Inc. above, what is the amount of the noncash expenses for 2015?
A. $740

B. $1,282

C. $1,333

D. $122

E. $2,351

19) Based on M&M Foods Inc. above, what is the operating cash flow for 2015?
A. $1,226
B. $1,367
C. $1,644
D. $1,766
E. $1,823

20) Based on M&M Foods Inc. above, what is the cash flow from assets for 2015 (may need to calculate the missing formulas from above)?
A. $1,230
B. $1,580
C. $1,770
D. $1,810
E. $1,980

21) Based on M&M Foods Inc. above, what is the Cash Flow to Creditors/Bondholders for 2015?
A. -$1,020
B. -$1,100
C. $280
D. $1,580
E. $1,760

22) Based on M&M Foods Inc. above, if they had $621 in additions to Retained Earnings during the year 2015 (per the Balance Sheet – 2015 RE of $1497 minus 2014 RE of $876 is $621), then how much did they pay in Dividends in 2015?
A. -$1,000
B. $345
C. $280
D. $621
E. $1,760

23) Based on M&M Foods Inc. above, since the Net Income is $1,242 Million (i.e., $1,242,000,000), and they have 50,000,000 shares outstanding, what are the Earnings per share (EPS)?
A. $27.02
B. $24.84
C. $14.55
D. $248.40
E. $12.42

BONUS Questions (+5% points potential):

1)Beach Front Industries has sales of $546,000, costs of $295,000, depreciation expense of $37,000, interest expense of $15,000, and a tax rate of 32 percent. The firm paid $59,000 in cash dividends. What is the addition to retained earnings? (Show work below, and Circle the correct answer)(+3% Points)

A. $76,320
B. $81,700
C. $95,200
D. $103,460
E. $121,680

2)The 2015 Corporate tax rates are as shown below. Nevada Mining currently has taxable income in 2015 of $97,800, and at these 2015 marginal Corporate tax Rates, Nevada Mining will pay $21,502 total tax liability. How much additional tax will the firm owe if taxable income increases by $21,000?(Show work below, and Circle the correct answer) (+2% Points)

A. $8,080
B. $8,130
C. $8,155
D. $8,170
E. $8,190

Get a 10% discount on an order above $50
Use the following coupon code :DUE