,WGU C214 Financial Management – Complete Practice Test | 125
Actual study Questions and Answers | 2026/27 Updates | 100%
correct
1. A firm reported the following: Net Income 100,000; Depreciation 25,000;
Change in NWC 15,000. What is the CFO (cash flow from operations)?
• A) 100,000
• B) 110,000
• C) 120,000
• D) (130,000)
Correct Answer: B) 110,000
Expert Rationale: CFO = Net Income + Depreciation – Increase in NWC = 100,000 +
25,000 – 15,000 = 110,000. Depreciation is a non-cash expense added back; an increase
in NWC is a cash outflow.
2. What is the Cash Flow from Investing? Beginning Net PP&E 50,000; Ending Net
PP&E 200,000; Depreciation Expense 40,000.
• A) (190,000)
• B) 150,000
• C) 200,000
• D) (150,000)
Correct Answer: A) (190,000)
Expert Rationale: CFI = –(Change in Net PP&E + Depreciation) = –[(200,000 – 50,000) +
40,000] = –190,000. The negative sign indicates a cash outflow for capital expenditures.
,3. What is the Cash Flow from Financing? Accounts Payable 50,000; Stock Issuance
75,000; Increase in Bonds Payable 125,000; Dividends Paid 80,000.
• A) 150,000
• B) 120,000
• C) 100,000
• D) 145,000
Correct Answer: B) 120,000
Expert Rationale: CFF = Issuance of Stock + Increase in Debt – Dividends Paid = 75,000
+ 125,000 – 80,000 = 120,000. Accounts Payable is an operating item, not financing.
4. A couple wants to save for a down payment on a house. They think they need to
accumulate 100,000 in five years. If the interest rate is 5% and they start at the end
of the year when they both get bonuses from their employers, what do they have
to put aside annually?
• A) 22,096
• B) 17,752
• C) 18,097
• D) 18,462
Correct Answer: C) 18,097
Expert Rationale: This is an ordinary annuity future value problem. Using a financial
calculator: FV = 100,000; N = 5; I/Y = 5; CPT PMT = 18,097.
5. Hedgeco had sales of 70,000,000, expenses of 50,000,000 and has a 40% tax
rate. It has equity of 40,000,000. The board approved dividends of 4,000,000.
What is the company's Sustainable Growth Rate?
• A) 20%
• B) 15%
• C) 25%
• D) 14%
, Correct Answer: A) 20%
Expert Rationale: SGR = ROE × (1 – Payout Ratio). NI = (70 – 50) × 0.6 = 12M. ROE =
12/40 = 0.30. Payout = 4/12 = 0.333. SGR = 0.30 × (1 – 0.333) = 20%.
6. A company wishes to issue 10-year semi-annual pay bonds with a face value of
$1,000 and a coupon rate of 5%. The market has shifted before the issuance and
the bonds will sell at 95% of face value. What is the YTM of the bonds when they
are sold?
• A) 6.71%
• B) 5.50%
• C) 5.66%
• D) 6.33%
Correct Answer: C) 5.66%
Expert Rationale: N = 20; PV = –950; PMT = 25; FV = 1,000; CPT I/Y = 2.83% per
period. Annual YTM = 2.83 × 2 = 5.66%.
7. What does a stock have to sell for one year in the future, if it currently sells for
$75, has a planned dividend of $2 a share and an expected return of 12%?
• A) 75
• B) 79
• C) 82
• D) 85
Correct Answer: C) 82
Expert Rationale: Using a financial calculator: PV = –75; PMT = 2; N = 1; I/Y = 12; CPT
FV = 82. The total return is the dividend plus capital gain.
Actual study Questions and Answers | 2026/27 Updates | 100%
correct
1. A firm reported the following: Net Income 100,000; Depreciation 25,000;
Change in NWC 15,000. What is the CFO (cash flow from operations)?
• A) 100,000
• B) 110,000
• C) 120,000
• D) (130,000)
Correct Answer: B) 110,000
Expert Rationale: CFO = Net Income + Depreciation – Increase in NWC = 100,000 +
25,000 – 15,000 = 110,000. Depreciation is a non-cash expense added back; an increase
in NWC is a cash outflow.
2. What is the Cash Flow from Investing? Beginning Net PP&E 50,000; Ending Net
PP&E 200,000; Depreciation Expense 40,000.
• A) (190,000)
• B) 150,000
• C) 200,000
• D) (150,000)
Correct Answer: A) (190,000)
Expert Rationale: CFI = –(Change in Net PP&E + Depreciation) = –[(200,000 – 50,000) +
40,000] = –190,000. The negative sign indicates a cash outflow for capital expenditures.
,3. What is the Cash Flow from Financing? Accounts Payable 50,000; Stock Issuance
75,000; Increase in Bonds Payable 125,000; Dividends Paid 80,000.
• A) 150,000
• B) 120,000
• C) 100,000
• D) 145,000
Correct Answer: B) 120,000
Expert Rationale: CFF = Issuance of Stock + Increase in Debt – Dividends Paid = 75,000
+ 125,000 – 80,000 = 120,000. Accounts Payable is an operating item, not financing.
4. A couple wants to save for a down payment on a house. They think they need to
accumulate 100,000 in five years. If the interest rate is 5% and they start at the end
of the year when they both get bonuses from their employers, what do they have
to put aside annually?
• A) 22,096
• B) 17,752
• C) 18,097
• D) 18,462
Correct Answer: C) 18,097
Expert Rationale: This is an ordinary annuity future value problem. Using a financial
calculator: FV = 100,000; N = 5; I/Y = 5; CPT PMT = 18,097.
5. Hedgeco had sales of 70,000,000, expenses of 50,000,000 and has a 40% tax
rate. It has equity of 40,000,000. The board approved dividends of 4,000,000.
What is the company's Sustainable Growth Rate?
• A) 20%
• B) 15%
• C) 25%
• D) 14%
, Correct Answer: A) 20%
Expert Rationale: SGR = ROE × (1 – Payout Ratio). NI = (70 – 50) × 0.6 = 12M. ROE =
12/40 = 0.30. Payout = 4/12 = 0.333. SGR = 0.30 × (1 – 0.333) = 20%.
6. A company wishes to issue 10-year semi-annual pay bonds with a face value of
$1,000 and a coupon rate of 5%. The market has shifted before the issuance and
the bonds will sell at 95% of face value. What is the YTM of the bonds when they
are sold?
• A) 6.71%
• B) 5.50%
• C) 5.66%
• D) 6.33%
Correct Answer: C) 5.66%
Expert Rationale: N = 20; PV = –950; PMT = 25; FV = 1,000; CPT I/Y = 2.83% per
period. Annual YTM = 2.83 × 2 = 5.66%.
7. What does a stock have to sell for one year in the future, if it currently sells for
$75, has a planned dividend of $2 a share and an expected return of 12%?
• A) 75
• B) 79
• C) 82
• D) 85
Correct Answer: C) 82
Expert Rationale: Using a financial calculator: PV = –75; PMT = 2; N = 1; I/Y = 12; CPT
FV = 82. The total return is the dividend plus capital gain.
