TEST BANK FOR Corporate Finance Core Principles and Applications 7th Edition By Stephen Ross

TEST BANK FOR Corporate Finance Core Principles and Applications 7th Edition By Stephen Ross-A firm has common stock of $86, paid-in surplus of $230, total liabilities of $390, current assets of $350, and net fixed assets of $560. What is the amount of the shareholders' equity? A) $910 B) $510 C) $520 D) $170 E) $706 2) Recently, the owner of Martha's Wares encountered severe legal problems and is trying to sell her business. The company built a building at a cost of $1,190,000 that is currently appraised at $1,390,000. The equipment originally cost $670,000 and is currently valued at $417,000. The inventory is valued on the balance sheet at $360,000 but has a market value of only one-half of that amount. The owner expects to collect 97 percent of the $200,200 in accounts receivable. The firm has $11,200 in cash and owes a total of $1,390,000. The legal problems are personal and unrelated to the actual business. What is the market value of this firm? A) $1,182,594 B) $802,394 C) $597,000 D) $1,542,594 E) $982,394 3) Ivan's, Incorporated, paid $500 in dividends and $595 in interest this past year. Common stock increased by $205 and retained earnings decreased by $131. What is the net income for the year? A) $369 B) $800 C) $595 D) $964 E) $500 4) The tax rates for a particular year are shown below: Taxable Income Tax Rate $0 – 50,000 15% 50,001 – 75,000 25% 75,001 – 100,000 34% 100,001 – 335,000 39% What is the average tax rate for a firm with taxable income of $124,013? A) 39.00% B) 36.39% C) 20.00% D) 27.98% E) 25.49% 5) The tax rates are as shown below: Taxable Income Tax Rate $0 – 50,000 15% 50,001 – 75,000 25% 75,001 – 100,000 34% 100,001 – 335,000 39% Your firm currently has taxable income of $81,700. How much additional tax will you owe if you increase your taxable income by $22,900? A) $7,626 B) $8,016 C) $8,931 D) $7,636 E) $7,786 6) Your firm has net income of $371 on total sales of $1,460. Costs are $800 and depreciation is $130. The tax rate is 30 percent. The firm does not have interest expenses. What is the operating cash flow? A) $501 B) $660 C) $901 D) $530 E) $371 7) Teddy's Pillows had beginning net fixed assets of $477 and ending net fixed assets of $562. Assets valued at $325 were sold during the year. Depreciation was $54. What is the amount of net capital spending? A) $464 B) $139 C) $85 D) $31 E) $291 8) At the beginning of the