C214 Practice Test Exam Questions & Answers |
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Terms in this set (125)
1. A firm reported the following: CFO = Net
Income + Depreciation - Increase NWC Net Income 100,000
Depreciation 25,000 =100,000 + 25,000 - 15,000
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)
,2.What is the Cash Flow from Investing? Cash Flow Investing (CFI)
Beginning Net PP&E 50,000 Change in Investment = (Change in Net PPE + Depreciation)
Ending Net PP&E 200,000
Depreciation Expense 40,000 =(200,000 - 50,000) + 40,000
a.(190,000) Change Invest = 190,000
b.150,000 CFI = (-1) * Change in Invest = (190,000)
c. 200,000
d. (150,000)
3.What is the Cash Flow from Financing? Cash Flow Financing
Accounts Payable 50,000 CFF = Increase in Stock + Increase in Debt - Dividends Paid
Stock Issuance 75,000
Increase in Bonds Payable 125,000 =75,000+125,000-80,000
Dividends Paid 80,000 =120,000
a.150,000
b.120,000
c. 100,000
d. 145,000
4.A couple wants to save for a down 100,000 FV
payment on a house. They think they need to 5
N
accumlate 100,000 in five years. If the 5 I/Y
interest rate is 5% and they start at the end Cpt PMT = 18,097
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
5. Hedgeco had sales of 70,000,000, SGR = ROE * ( 1 - Payout Ratio )
expenses of 50,000,000 and has a 40% tax ROE = Net Income / Equity
rate. It has equity of 40,000,000. The board Payout Ratio = Dividends Paid / Net Income
approved dividends of 4,000,000. What is Net Income = (70 - 50)*(1-0.4) = 12 ROE = 12/40 = 0.30
the company's Sustainable Growth Rate? Payout Ratio = 4/12 = .33
a.20% SGR = .30 * (1 - 0.33) = .20
b.15%
c. 25%
d. 14%
6.A company wishes to issue 10 year semi- 20 N
annual pay bonds with a face value of 1000 FV
$1,000 and a coupon rate of 5%. The market
25 PMT
has shifted before the issuance and the (950) PV
bonds will sell at 95% of face value. What is Cpt I/Y = 2.83 * 2 = 5.66%
the YTM of the bonds when they are sold?
a.6.71%
b.5.50%
c. 5.66%
d. 6.33%
, 7.What does a stock have to sell for one 1N
year in the future, if it currently sells for $75,
(75) PV
has a planned dividend of $2 a share and an
2 PMT
expected return of 12%? 12 I/Y
a.75 Cpt FV = 82
b. 79
c. 82
d. 85
8.A company just paid a dividend of 2.00 to Price = Projected Next Div / (Req Return - Growth
Rate) its shareholder. It estimates that future Next Dividend = Last Dividend x (1+growth rate)
growth will be at 5%. What is the value of the = (2 * 1.05) / (0.10 - 0.05)
stock if you are looking for an 10% return on = 42
your investment?
a.41.75
b. 42
c. 41
d. 39
9.To create a fund for annual college Perpetuity: Present Value = Payments / Interest Rate
scholarships of $100,000 that will last
forever, how much must be invested today if PV = 100,000 / .05
the interest rate is 5%? PV = 2,000,000
a.1,000,000
b.5,000,000
c. 500,000
d. 2,000,000
10. The market yield is 15% and Treasury E(r) = Risk
Free Rate + Beta * ( Market Yield - Risk Free Rate) bonds are yielding 3%. If a stock has a beta E(r) = Risk
Free Rate + Beta * ( Market Risk Premium)
of 1.5. What is that stock's expected return? =.03 + 1.5 * (.15 - .03)
a..17 =.03 + .18
b. .18 =.21
c. .21
d. .15
11. Common stock is valued at 500,000 and WACC =
(Stock/Total Funds) x Rate + (Debt/Total Funds) x Long-term debt is valued at 300,000. What Rate x
(1-tax rate)
is the WACC if common stock costs .15 and =(500/800).15 + (300/800).07*(1-0.4)
long-term debt costs .07? The tax rate is =0.625.15 + (0.375.07*0.6)
40%. = 0.0938 + 0.0158
a..1275 = 0.1095
b. .125
c. .1225
d. .1095
Latest Already Graded A+ |Questions with
Correct Answers 2026 latest update!
Terms in this set (125)
1. A firm reported the following: CFO = Net
Income + Depreciation - Increase NWC Net Income 100,000
Depreciation 25,000 =100,000 + 25,000 - 15,000
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)
,2.What is the Cash Flow from Investing? Cash Flow Investing (CFI)
Beginning Net PP&E 50,000 Change in Investment = (Change in Net PPE + Depreciation)
Ending Net PP&E 200,000
Depreciation Expense 40,000 =(200,000 - 50,000) + 40,000
a.(190,000) Change Invest = 190,000
b.150,000 CFI = (-1) * Change in Invest = (190,000)
c. 200,000
d. (150,000)
3.What is the Cash Flow from Financing? Cash Flow Financing
Accounts Payable 50,000 CFF = Increase in Stock + Increase in Debt - Dividends Paid
Stock Issuance 75,000
Increase in Bonds Payable 125,000 =75,000+125,000-80,000
Dividends Paid 80,000 =120,000
a.150,000
b.120,000
c. 100,000
d. 145,000
4.A couple wants to save for a down 100,000 FV
payment on a house. They think they need to 5
N
accumlate 100,000 in five years. If the 5 I/Y
interest rate is 5% and they start at the end Cpt PMT = 18,097
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
5. Hedgeco had sales of 70,000,000, SGR = ROE * ( 1 - Payout Ratio )
expenses of 50,000,000 and has a 40% tax ROE = Net Income / Equity
rate. It has equity of 40,000,000. The board Payout Ratio = Dividends Paid / Net Income
approved dividends of 4,000,000. What is Net Income = (70 - 50)*(1-0.4) = 12 ROE = 12/40 = 0.30
the company's Sustainable Growth Rate? Payout Ratio = 4/12 = .33
a.20% SGR = .30 * (1 - 0.33) = .20
b.15%
c. 25%
d. 14%
6.A company wishes to issue 10 year semi- 20 N
annual pay bonds with a face value of 1000 FV
$1,000 and a coupon rate of 5%. The market
25 PMT
has shifted before the issuance and the (950) PV
bonds will sell at 95% of face value. What is Cpt I/Y = 2.83 * 2 = 5.66%
the YTM of the bonds when they are sold?
a.6.71%
b.5.50%
c. 5.66%
d. 6.33%
, 7.What does a stock have to sell for one 1N
year in the future, if it currently sells for $75,
(75) PV
has a planned dividend of $2 a share and an
2 PMT
expected return of 12%? 12 I/Y
a.75 Cpt FV = 82
b. 79
c. 82
d. 85
8.A company just paid a dividend of 2.00 to Price = Projected Next Div / (Req Return - Growth
Rate) its shareholder. It estimates that future Next Dividend = Last Dividend x (1+growth rate)
growth will be at 5%. What is the value of the = (2 * 1.05) / (0.10 - 0.05)
stock if you are looking for an 10% return on = 42
your investment?
a.41.75
b. 42
c. 41
d. 39
9.To create a fund for annual college Perpetuity: Present Value = Payments / Interest Rate
scholarships of $100,000 that will last
forever, how much must be invested today if PV = 100,000 / .05
the interest rate is 5%? PV = 2,000,000
a.1,000,000
b.5,000,000
c. 500,000
d. 2,000,000
10. The market yield is 15% and Treasury E(r) = Risk
Free Rate + Beta * ( Market Yield - Risk Free Rate) bonds are yielding 3%. If a stock has a beta E(r) = Risk
Free Rate + Beta * ( Market Risk Premium)
of 1.5. What is that stock's expected return? =.03 + 1.5 * (.15 - .03)
a..17 =.03 + .18
b. .18 =.21
c. .21
d. .15
11. Common stock is valued at 500,000 and WACC =
(Stock/Total Funds) x Rate + (Debt/Total Funds) x Long-term debt is valued at 300,000. What Rate x
(1-tax rate)
is the WACC if common stock costs .15 and =(500/800).15 + (300/800).07*(1-0.4)
long-term debt costs .07? The tax rate is =0.625.15 + (0.375.07*0.6)
40%. = 0.0938 + 0.0158
a..1275 = 0.1095
b. .125
c. .1225
d. .1095
