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 year, a firm has current assets of $332 and current liabilities of $236. At the end of the year, the current assets are $501 and the current liabilities are $276. What is the change in net working capital? 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 of the year, long-term debt is $254 and total debt is $334. The interest paid is $20. What is the amount of the cash flow to creditors? 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 income to its shareholders as dividends. During the year, the company sold $85 worth of common stock. What is the cash flow to stockholders? A) $205.00 B) $35.00 C) $280.00 D) $94.50 E) $120.00 11) A company has total equity of $1,905, net working capital of $155, long-term debt of $900, and current liabilities of $930. What is the company's net fixed assets? A) $1,085 B) $2,805 C) $2,650 D) $1,935 E) $3,735 12) Disturbed, Incorporated, had the following operating results for the past year: sales = $22,569; depreciation = $1,370; interest expense = $1,104; costs = $16,520. The tax rate for the year was 30 percent. What was the company's operating cash flow? A) $7,122 B) $3,575 C) $4,977 D) $2,774 E) $2,503