Test Bank — Corporate Finance: Core Principles and Applications, 7th Edition (Ross, Westerfield, Jaffe & Jordan) Chapters 1–21 Complete Exam Prep 2026–2027

Test Bank — Corporate Finance: Core Principles and
Applications, 7th Edition (Ross, Westerfield, Jaffe &
Jordan) Chapters 1–21 | Complete Exam Prep 2026–
2027
All chapters covered




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,TEST BANK FOR v v




Corporate Finance Core Principles and Applications 7th Edition By Stephen Ross
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Chapter 1-21 Answers are at the End of Each Chapter
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Chapter 1 v




Student name: v




1) A firm has common stock of $86, paid-in surplus of $230, total liabilities of $390, current
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v assets of $350, and net fixed assets of $560. What is the amount of the shareholders' equity?
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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
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sell her business. The company built a building at a cost of $1,190,000 that is currently
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appraised at $1,390,000. The equipment originally cost $670,000 and is currently valued at
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$417,000. The inventory is valued on the balance sheet at $360,000 but has a market value of
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only one-half of that amount. The owner expects to collect 97 percent of the $200,200 in
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accounts receivable. The firm has $11,200 in cash and owes a total of $1,390,000. The legal
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problems are personal and unrelated to the actual business. What is the market value of this
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firm?
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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
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vincreased by $205 and retained earnings decreased by $131. What is the net income for the
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vyear?
A) $369
B) $800
C) $595
D) $964
E) $500




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,4) The tax rates for a particular year are shown below:
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Taxable Income Tax Rate v v




$0 – 50,000 15% v v




50,001 – 75,000 25% v v




75,001 – 100,000 34% v v




100,001 – 335,000 39% v v




What is the average tax rate for a firm with taxable income of $124,013?
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A) 39.00%
B) 36.39%
C) 20.00%
D) 27.98%
E) 25.49%



5) The tax rates are as shown below:
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Taxable Income v Tax Rate v




$0 – 50,000 v v 15%
50,001 – 75,000 v v 25%
75,001 – 100,000 v v 34%
100,001 – 335,000 v v 39%
Your firm currently has taxable income of $81,700. How much additional tax will you owe if
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you increase your taxable income by $22,900?
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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
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$130. The tax rate is 30 percent. The firm does not have interest expenses. What is the operating
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cash flow?
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A) $501
B) $660
C) $901
D) $530
E) $371




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, 7) Teddy's Pillows had beginning net fixed assets of $477 and ending net fixed assets of $562.
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v Assets valued at $325 were sold during the year. Depreciation was $54. What is the amount of
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v net capital spending?
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A) $464
B) $139
C) $85
D) $31
E) $291



8) At the beginning of the year, a firm has current assets of $332 and current liabilities of $236. At
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vthe end of the year, the current assets are $501 and the current liabilities are $276. What is the
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vchange in net working capital?
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A) $209
B) $0
C) −$129
D) $129
E) $169



9) At the beginning of the year, long-term debt of a firm is $278 and total debt is $324. At the end
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vof the year, long-term debt is $254 and total debt is $334. The interest paid is $20. What is the
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vamount of the cash flow to creditors?
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A) −$44
B) $24
C) $44
D) −$24
E) $20



10) Peggy Grey's Cookies has net income of $400. The firm pays out 30 percent of the net
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v income to its shareholders as dividends. During the year, the company sold $85 worth of
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v common stock. What is the cash flow to stockholders?
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A) $205.00
B) $35.00
C) $280.00
D) $94.50
E) $120.00




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