BADM 534 / BADM534
MANAGERIAL FINANCE FINAL EXAM
● Question 1
● 1 out of 1 points
●
Which of the following statements is
... [Show More] CORRECT?
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Which of the following is NOT associated with (or does not contribute to business risk? Recall that business risk is affected by a firm's
● 1 out of 1 points
Which of the following statements is CORRECT?
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Suppose a firm relies exclusively on the payback method when making capital budgeting decisions, and it sets a 4-year payback regardless of economic conditions. Other things held constant, which of the following statements is most likely to be true?
● 1 out of 1 points
Which of the following actions should Reece Windows take if it wants to
reduce its cash conversion cycle?
Firms generally choose to finance temporary current operating assets with short-term debt because
Which one of the following statements is TRUE?
Kenny Electric Company's noncallable bonds were issued several years ago and now have 20 years to maturity. These bonds have a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has par value of $1,000. If the firm's tax rate is 25%, what is the component cost of debt for use in the WACC calculation?
Anson Jackson Court Company (AJC)
The Anson Jackson Court (AJC) currently has $150,000 market value (and book value) of perpetual debt outstanding carrying a coupon rate of 6%. Its earnings before interest and taxes (EBIT) are $89,000, and it is a zero growth company. AJC's current cost of equity is 10%, and its tax rate is 25%. The firm has 10,000 shares of common stock outstanding selling at a price per share of
$60.00.
Suppose 1 U.S. dollar equals 1.60 Canadian dollars in the spot market. 6-month Canadian securities have an annualized return of 6% (and thus a 6-month periodic return of 3%). 6-month U.S. securities have an annualized return of 6.5% and a periodic return of 3.25%. If interest rate parity holds, what is the U.S. dollar-Canadian dollar exchange rate in the 180-day forward market?
Wells Water Systems recently reported $8,250 of sales, $4,500 of operating costs other than depreciation, and $950 of depreciation. The company had no amortization charges, it had $3,250 of outstanding bonds that carry a 6.75% interest rate, and its
federal-plus-state income tax rate was 25%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to spend $750 to buy new fixed assets and to invest $250 in net operating working capital. How much free cash flow did Wells generate?
Stock A has a beta of 0.8, Stock B has a beta of 1.0, and Stock C has a beta of 1.2. Portfolio P has 1/3 of its value invested in each stock. Each stock has a standard deviation of 25%, and their returns are independent of one another, i.e., the correlation coefficients between each pair of stocks is zero. Assuming the market is in equilibrium, which of the following statements is CORRECT?
Which of the following statements is CORRECT?
Which of the following rules is CORRECT for capital budgeting analysis?
Which of the following statements is CORRECT? [Show Less]