FINC 5310

FINC 5310 1. The Blue Giant has a profit margin of 6.2 percent and a dividend payout ratio of 40 percent. The capital intensity is 1.08 and the debt-equity ratio is .54. What is the sustainable rate of growth? A. 6.30% B. 5.53% C. 5.89% D. 5.60% E. 6.41% - Correct Answer-D 2. Which of the following statements is CORRECT? A. Relative to sole proprietorships, corporations generally face fewer regulations, which makes raising capital easier for corporations. B. One disadvantage of operating as a corporation rather than as a partnership is that corporate shareholders are exposed to more personal liability than partners. C. Bondholders are generally more willing than stockholders to have managers invest in risky projects with high potential returns as opposed to safer projects with lower expected returns. D. Stockholders are generally more willing than bondholders to have managers invest in risky projects with high potential returns as opposed to safer projects with lower expected returns. E. There is no good reason to expect a firm's bondholders and stockholders to react differently to the types of new asset investments a firm makes. - Correct Answer-D 3. You sold your motorcycle and accepted a note with the following cash flow stream as your payment. What was the effective price you received for the car assuming an interest rate of 6.0%? A. $6,930 B. $5,987 C. $6,600 D. $7,277 E. $6,286 - Correct Answer-B 4. Muscarella Inc. has the following balance sheet and income statement data: Cash $14,000 Receivables $70,000 Inventories $210,000 Total CA $294,000 Net fixed assets $126,000 Total assets $420,000 Accounts payable $42,000 Other current liabilities $28,000 Total CL $70,000 Long-term debt $70,000 Common equity $280,000 Total liab. and equity $420,000 Sales $280,000 Net income $21,000