STR 581 Capstone Final Exam Part 2 (2018)


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STR 581 Capstone Final Exam Part 2

  1. Which of the following presents a summary of changes in a firm’s balance sheet from the beginning of an accounting period to the end of that accounting period?
  2. If a company’s weighted average cost of capital is less than  the required return on equity, then the firm:
  3. External financing needed: Jockey Company has total assets worth $4,417,665. At year-end it will have net income of $2,771,342 and pay out 60 percent as dividends. If the firm wants no external financing, what is the growth rate it can support?
  4. Firms that achieve higher growth rates without seeking external financing:
  5. TuleTime Comics is considering a new show that will generate annual cash flows of $100,000 into the infinite future. If the initial outlay for such a production is $1,500,000 and the appropriate discount rate is 6 percent for the cash flows, then what is the profitability index for the project?
  6. Horizontal analysis is also known as
  7. The cash conversion cycle?
  8. Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company’s bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)
  9. Internal reports that review the actual impact of decisions are prepared by:Jack Robbins is saving for a new car. He needs to have $21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target? (Round to nearest dollar)
  10. What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?
  11. Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28.  Serox pays a $1.10 dividend per year.  What was the rate of return for owning Serox in the most recent year? (Round to the nearest percent.)
  12. Gateway, Corp.  has an inventory turnover of 5.6.  What is the firm’s days’s sales in inventory?
  13. M&M Proposition 1: Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever.  Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 10 percent of the stock.
  14. If Dynamo wishes to change its capital structure from 75 percent equity to 60 percent equity and use the debt proceeds to pay a special dividend to shareholders, how much debt should they use?
  15. Variance reports are str 581 capstone final exam
  16. The process of evaluating financial data that change under alternative courses of action….
  17. The major element in budgetary control is:
  18. Which of the following is considered a hybrid organizational form?
  19. Process costing is used when:
  20. Your firm has an equity multiplier of 2.47.  What is the debt-to-equity ratio?
  21. The group of users of accounting information charged with achieving the goals of the business is its:
  22. Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?
  23. When a company assigns the costs of direct materials, direct labor, and both variable and fixed manufacturing overhead to products, that company is using:
  24. The convention of consistency refers to consistent use of accounting principles:
  25. An unrealistic budget is more likely to result when it str 581 capstone final exam
  26. The most important information needed to determine if companies can pay their current obligations is the:
  27. Teakap, Inc. has current assets of $1,456,312 and total assets of $4,812,369 for the year ending September 30, 2006.  It also has current liabilities of $1,041,012, common equity of $1,500,000 and retained earnings of $1,468,347. How much long-term debt does the firm have?
  28. Ajax Corp. is expecting the following cash flows – $79,000, $112,000, $164,000, $84,000, and $242,000 – over the next five years.  If the company’s opportunity cost is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.)
  29. Turnbull Corp. had an EBIT of $247 million in the last fiscal year.  Its depreciation and amortization expenses amounted to $84 million.  The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Turnbull has an enterprise value/EBITDA multiple of 5.40 str 581 capstone final exam
  30. What is the enterprise value of Turnbull Corp.? Round to the nearest million dollars.
  31. Next year Jenkins Traders will pay a dividend of $3.00.  It expects to increase its dividend by $0.25 in each of the following three years.  If their required rate of return if 14 percent, what is the present value of their dividends over the next four years?
  32. An activity that has a direct cause-effect relationship with the resources consumed is a(n):
  33. JayadevAthreya has started his first job. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent.  How much will Jayadev have at the end of 45 years?
  34. The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area…..
  35. Which of the following financial statements is concerned with the company at a point in time?
  36. The break-even point is where str 581 capstone final exam
  37. How firms estimate their cost of capital: The WACC for a firm is 13.00 percent. You know that the firm’s cost of debt capital is 10 percent and the cost of equity capital is 20% What proportion of the firm is financed with debt?
  38. Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time:
  39. A cost which remains constant per unit at various levels of activity is a:str 581 capstone final exam