STR 581 Week 4 Capstone Final Exam Part 2

STR 581 Week 4 Capstone Final Exam Part 2 1. Complete the Capstone Final Examination, Part 2. You are allowed one attempt to complete the examination, which is timed and must be completed in 3 hours. Results are auto-graded and sent to your instructor. Resources: Course Materials from ACC/561 and FIN/571, Capstone Exam Review Note: The automated final exam was designed in Google Chrome and is best viewed in the latest version of the browser. If you do not use the latest version of Google Chrome to view and complete the automated final exam, you may not be able to view the entire exam content. If you do not have the most current version of Google Chrome, download the browser before you enter the exam. 2. Question 1 / 2 Rick, a certified accountant, is asked to conduct an audit of the financial statements of Schenk Ltd. However, the company refuses to cooperate with Rick and does not provide him with the necessary information. This makes it impossible for him to carry on with the audit. In this scenario, which of the following opinions is Rick most likely to express? Incorrect (A) Disclaimer of opinion is correct Hide other options 1. Disclaimer of opinion Correct answer 2. Adverse opinion 3. Unqualified opinion 4. Qualified opinion 3. Question 2 / 2 Wilande Inc., a leading apparel store, acquires Parewa Inc., an energy drink manufacturer. This is an example of a __________. Correct (D) conglomerate acquisition Show other options 4. Question 3 / 2 Darrin Corporation is considering a proposal to purchase a new piece of equipment. The cost of the equipment is $16,611. The equipment is estimated to provide an annual cash flow of $3,000 for the next nine years. The company has a required rate of return of 15%. Calculate the internal rate of return (IRR), and interpret the results. Use the present value of an annuity table. Correct (A) Since the IRR is lesser ... Show other options 5. Question 4 / 2 Rinetin Corporation has been falsifying its financial statements for the past year. The staff in the accounting department of the company have been fake employee IDs and recording payments on the company’s payroll. The funds sent to these fake employees are then redirected to the company’s bank accounts. When Rinetin Corporation is audited, the auditors fail to discover this fraud because of their negligence. Months later, a whistle-blower alerts the appropriate authorities about the company’s deceptive practices. In this scenario, the accountants who conducted the audit of the company will be held civilly liable under __________. Correct (C) Section 11(a) of the ... Show other options 6. Question 5 / 2 Gina and Samantha are discussing the Sarbanes-Oxley Act of 2002. Gina argues that although the act requires the management of a company to explicitly declare in writing that a company’s financial statements accurately and fairly represent the financial results, no steps have been taken to ensure that this rule is followed. Which of the following statements weakens Gina’s argument? Incorrect (D) If a company’s financial ... is correct Hide other options 1. An individual who is employed by a certified public accounting firm that audits a company can be employed as the CEO or CFO of that company to ensure the fairness of its financial statements. 2. The Sarbanes-Oxley Act prohibits a public company from granting personal loans to any of its executive officers or directors 3. If a CEO or CFO of a company fails to comply with the provisions of the act, he or she is subject to a fine up to $10,000 and one year in jail. 4. If a company’s financial statements contain misrepresentations, the CEO and CFO run the risk of serving time in jail. Correct answer 7. Question 6 / 2 Yalken Corporation is considering the purchase of a new machine. The cost of the machine is $250,000. The cash flows for five years are given below. Year 1 Year 2 Year 3 Year 4 Year 5 Cash flows: $84,790 $102,500 $70,580 $64,760 $115,700 The company is in the 35 percent tax bracket. Assuming that the cost of capital is 12%, calculate the net present value. Correct (D) $64,463 Show other options 8. Question 7 / 2 The capital structure for Purnen Corporation is given below. Calculate the weighted average cost of capital (WACC). Debt: 10%, 1,500 bonds, 20 years to maturity, selling for 105% of par. The bonds have a $1,000 par value each and make annual payments. Common stock: 3,000,000 shares outstanding at a par value of $1, selling for $35 a share. The expected dividend is $2.8, and the growth rate is 10%. Preferred stock: 5,000 shares of 6% preferred stock outstanding, selling for $103 a share and having a par value of $100. The flotation cost is $3, and the dividend is $9. The corporate tax rate is 35%. Incorrect (A) 13.65 is correct Hide other options 1. 13.65% Correct answer 2. 16.5% 3. 9.96% 4. 8.4% 9. Question 8 / 2 Susan is a financial manager at Rvetz Corporation. She wants to evaluate the efficiency with which the company is using its resources. For this reason, she needs to calculate the operating margin from the information given below. Net sales $3,500,000 Cost of goods sold 1,750,000 Office rent 54,500 Selling expenses 350,000 Interest expense 50,000 Other operating expenses 88,500 Which of the following will be the result? Correct (A) 35.9 Show other options 10. Question 9 / 2 Robert is a manager of a small-scale firm. He needs to decide whether the firm has sufficient resources to meet its short-term obligations. Calculate the ratio that Robert needs to calculate from the information given below. Cash and cash equivalents $1,057,600 Accounts receivables 1,556,500 Short-term investments 770,300 Other current assets 420,500 Accounts payable 995,700 Long-term debt 528,000 Short-term debt 176,000 Other current liabilities 2,495,700 Correct (A) Current ratio of 1.04