C214 WGU EXAM CRAM QUESTIONS WITH
CORRECT ANSWERS 2026
Pt - correct answer-is the sold price
Pt-1 - correct answer-is the bought price
CFt - correct answer-is the cash flow (coupons for bonds; dividends for stocks).
Dollar Returns - correct answer-= Pt - Pt-1 + CFt
Cash Flow from Investing (CFI) - correct answer-= Change in Net PP&E + Depreciation Expense
Net PP&E - correct answer-= Gross PP&E - Accumulated Depreciation
With the assumption of no asset disposals, CFI will be equal to - correct answer-
1) change in Gross PP&E or 2) Change in Net PP&E plus depreciation expense.
Dividends - correct answer-= (Old RE + Net Income) - New RE
Change in RE - correct answer-= NI -dividends
CFF - correct answer-= change in notes payable + change in long-term debt -
dividends (assuming no other relevant changes)
FCFF - correct answer-= EBIT (1-tax rate) + Depreciation - CAPEX - Increases in NWC
EBIT - correct answer-= Earnings before interest and taxes
CAPEX - correct answer-= Capital expenditure on PP&E; frequently measured as CFI
, NWC - correct answer-= Net working capital (current assets - current liabilities) changes
FCFE - correct answer-= NI + Depreciation - CAPEX - Increases in NWC + Increases in Debt
TAT Total Asset Turnover = Sales / Total Assets: - correct answer-
Literally, this ratio measures how many dollars in sales the firm generates per dollar of assets.
TAT of three indicates that for - correct answer-every $1 of assets, the firm is generating $3 in sales.
TIE The Times Interest Earned Ratio = EBIT / Interest Expense: - correct answer-
Operating expense/Interest Expense
r - correct answer-= Real Risk-Free Rate + Inflation + Risk Premium
r = (definition for TMV) - correct answer-
Nominal discount rate (note: nominal means inflation is included)
Real risk-free rate - correct answer-= The rate earned on riskless investments with 0% inflation
Inflation - correct answer-= The annual decay in the purchasing power of money
Risk premium - correct answer-= Compensation for bearing the risk of a particular investment
TVM is a relatively simple concept. Essentially, we bring together three variables: - correct answer-
1) amount of the cash flows
2) the timing of the cash flows
3) the rate at which the value of the cash flows changes due to the passage of time.
CORRECT ANSWERS 2026
Pt - correct answer-is the sold price
Pt-1 - correct answer-is the bought price
CFt - correct answer-is the cash flow (coupons for bonds; dividends for stocks).
Dollar Returns - correct answer-= Pt - Pt-1 + CFt
Cash Flow from Investing (CFI) - correct answer-= Change in Net PP&E + Depreciation Expense
Net PP&E - correct answer-= Gross PP&E - Accumulated Depreciation
With the assumption of no asset disposals, CFI will be equal to - correct answer-
1) change in Gross PP&E or 2) Change in Net PP&E plus depreciation expense.
Dividends - correct answer-= (Old RE + Net Income) - New RE
Change in RE - correct answer-= NI -dividends
CFF - correct answer-= change in notes payable + change in long-term debt -
dividends (assuming no other relevant changes)
FCFF - correct answer-= EBIT (1-tax rate) + Depreciation - CAPEX - Increases in NWC
EBIT - correct answer-= Earnings before interest and taxes
CAPEX - correct answer-= Capital expenditure on PP&E; frequently measured as CFI
, NWC - correct answer-= Net working capital (current assets - current liabilities) changes
FCFE - correct answer-= NI + Depreciation - CAPEX - Increases in NWC + Increases in Debt
TAT Total Asset Turnover = Sales / Total Assets: - correct answer-
Literally, this ratio measures how many dollars in sales the firm generates per dollar of assets.
TAT of three indicates that for - correct answer-every $1 of assets, the firm is generating $3 in sales.
TIE The Times Interest Earned Ratio = EBIT / Interest Expense: - correct answer-
Operating expense/Interest Expense
r - correct answer-= Real Risk-Free Rate + Inflation + Risk Premium
r = (definition for TMV) - correct answer-
Nominal discount rate (note: nominal means inflation is included)
Real risk-free rate - correct answer-= The rate earned on riskless investments with 0% inflation
Inflation - correct answer-= The annual decay in the purchasing power of money
Risk premium - correct answer-= Compensation for bearing the risk of a particular investment
TVM is a relatively simple concept. Essentially, we bring together three variables: - correct answer-
1) amount of the cash flows
2) the timing of the cash flows
3) the rate at which the value of the cash flows changes due to the passage of time.
