A business created as a distinct legal entity is called a:
limited partnership.
corporation.
general partnership.
unlimited liability company.
sole proprietorship.
One disadvantage of the corporate form of business ownership is the:
difficulties encountered when changing ownership.
limited liability protection provided for all owners.
firm’s ability to raise cash.
unlimited life of the firm.
double taxation of profits.
The decisions made by financial managers should all be ones which increase the:
size of the firm.
marketability of the managers.
growth rate of the firm.
market value of the existing owners' equity.
firm’s current sales.
Which one of these is a cash outflow from a corporation?
profit retained by the firm
sale of common stock
issuance of debt
dividend payment
sale of an asset
The primary goal of financial management is to:
avoid financial distress.
maximize the current value per share of the existing stock.
maintain steady growth in both sales and net earnings.
minimize operational costs and maximize firm efficiency.
maximize current dividends per share of the existing stock.
Which one of the following business types is best suited to raising large amounts of capital?
general partnership
limited partnership
limited liability company
sole proprietorship
corporation
Accounting profits and cash flows are generally:
different because cash inflows must occur before revenue recognition.
the same since they reflect current laws and accounting standards.
different because of GAAP rules regarding the recognition of income.
the same since accounting profits reflect when cash flows occur.
the same due to the requirements of GAAP.
Gerold invested $120 in an account that pays 6 percent simple interest. How much money will he have at the end of 5 years?
$148.80
$144.00
$148.20
$162.24
$156.00
What is the future value of $950 a year for 5 years at a 6 percent interest?
$5,355.24
$6,405.84
$5,035.00
$4,001.49
$4,854.54
Some time ago, Julie purchased eleven acres of land costing $14,190. Today, that land is valued at $48,052. How long has she owned this land if the price of the land has been increasing at 5 percent per year?
24.72 years
25.13 years
24.51 years
24.67 years
25.00 years
First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually.

Compute the future value of $1,000 compounded annually for 20 years at 7 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Compute the future value of $1,000 compounded annually for 15 years at 8 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Compute the future value of $1,000 compounded annually for 25 years at 7 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
For each of the following, compute the present value (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.):
Wilkinson Co. has identified an investment project with the following cash flows:

Year


Cash Flow


1



$

920



2




1,330



3




1,590



4




1,775



If the discount rate is 10 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
If the discount rate is 20 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
If the discount rate is 30 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
You own 200 shares of Western Feed Mills stock valued at $45.90 per share. What is the dividend yield if your annual dividend income is $322?
3.2 percent
3.5 percent
14.3 percent
12.5 percent
5.4 percent
Suppose a stock had an initial price of $66 per share, paid a dividend of $1.70 per share during the year, and had an ending share price of $78. Compute the percentage total return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
You’ve observed the following returns on SkyNet Data Corporation’s stock over the past five years: 13 percent, –13 percent, 20 percent, 25 percent, and 10 percent. Suppose the average inflation rate over this period was 3 percent, and the average Tbill rate over the period was 3.3 percent.
What was the average real return on the stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
What was the average nominal risk premium on the stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.)
