QRB 501 FINAL EXAM

QRB 501 FINAL EXAM 1. one disadvantage of the corporate form of business ownership is the: double taxation of profits 2. which one of the following statements is false? An aging schedule includes only overdue accounts 3. A firm has a debt-equity ratio of .64, a pretax cost of debt of 8.5 percent, and a required return on assets of 12.6 percent. What is the cost of equity if you ignore taxes? 15.22% 4. Which one of these statements is correct concerning the cash cycle? The longer the cash cycle, the more likely a firm will need external financing. 5. You plan to invest $6,500 for three years at 4 percent simple interest. What will your investment be worth at the end of the three years? $7,311.62 (OG) $7,280 (NEW) 6. Which one of the following statements about preferred stock is true? Preferred stock usually has a stated liquidating value of $100 per share 7. A firm has a total debt ratio of .47. This means the firm has 47 cents in debt for every: $1 in fixed assets (OG) $.53 in total equity (NEW) 8. The costs of avoiding a bankruptcy filing by a financially distressed firm are classified as ______ costs. Indirect bankruptcy 9. All else held constant, interest rate risk will increase when the time to maturity: Increases or the coupon rate decreases. 10. What is the present value of $6,811 to be received in one year if the discount rate is 6.5 percent? $7,253.72 (OG) $6,395.31 (NEW) 11. All else equal, the contribution margin must increase as: The variable cost per unit declines 12. The process of planning and managing a firm’s long-term assets is called