FIN 300 Final Exam Question and
answers verified to pass 2025
One of the most important disadvantages of the corporate form of business is:
a. limited owner liability
b. ease of transferring ownership
c. double taxation
d. unlimited owner liability - correct answer ✔c. double taxation
Profit maximization:
a. is the ultimate goal of a firm
b. is a long-run concept
c. always maximizes the wealth of the owners
d. does not consider future cash flows or risk - correct answer ✔d. does not
consider future cash flows or risk
Hillary Rotteneggs wishes to form a company that will specialize in toxic waste
removal and storage. Which type of business form would be most
advantageous?
a. a sole proprietorship due to its low cost and ease of formation
b. a partnership due to its low cost and diversitifcation of ownership
c. a corporation due to its limited liability
d. any of the above would be equally acceptable - correct answer ✔c. a
corporation due to its limited liability
,Which of the following is true?
a. as the length of time until an exepcted cash flow increases, the stock price
decreases
b. as the riskiness of the cash flow increases, the stock price decreases
c. as the size of the expected cash inflow decreases, the stock price increases
d. all of the above statements are true - correct answer ✔a. as the length of
time until an exepcted cash flow increases, the stock price decreases
The income statement:
a. is a financial statement that shows the firm's financial position at a particular
point in time
b. is a financial statement that summarizes a firm's revenues and expenses
over a period of time
c. is a financial statement that summarizes a firm's revenues and expenses at
a patricular point in time
d. details the firm's assets and liabilities over a period of time - correct answer
✔b. is a financial statement that summarizes a firm's revenues and expenses
over a period of time
Each of the following items is a liability with the exception of:
a. long-term debt
b. notes payable
c. prepaid expenses
d. accrued expenses - correct answer ✔c. prepaid expenses
, Given the following information, calculate earnings per share:
Interest Expense - 40,000
Net Income - 400,000
Preferred dividends paid - 65,000
Common dividends paid - 100,000
Common Stock Oustanding - 100,000
a. 1.95
b. 3.35
c. 2.35
d. 3.60 - correct answer ✔b. 3.35
Depreciation:
a. is not a true expense
b. represents a cash outflow on the cash flow statement
c. is deducted from net income
d. is a tax deductible non-cash expense - correct answer ✔d. is a tax
deductible non-cash expense
As the discount rate decreases, the present value of a positive cash flow to be
received at a particular time in the future:
a. gets closer to zero
b. gets larger
c. stays unchanged
answers verified to pass 2025
One of the most important disadvantages of the corporate form of business is:
a. limited owner liability
b. ease of transferring ownership
c. double taxation
d. unlimited owner liability - correct answer ✔c. double taxation
Profit maximization:
a. is the ultimate goal of a firm
b. is a long-run concept
c. always maximizes the wealth of the owners
d. does not consider future cash flows or risk - correct answer ✔d. does not
consider future cash flows or risk
Hillary Rotteneggs wishes to form a company that will specialize in toxic waste
removal and storage. Which type of business form would be most
advantageous?
a. a sole proprietorship due to its low cost and ease of formation
b. a partnership due to its low cost and diversitifcation of ownership
c. a corporation due to its limited liability
d. any of the above would be equally acceptable - correct answer ✔c. a
corporation due to its limited liability
,Which of the following is true?
a. as the length of time until an exepcted cash flow increases, the stock price
decreases
b. as the riskiness of the cash flow increases, the stock price decreases
c. as the size of the expected cash inflow decreases, the stock price increases
d. all of the above statements are true - correct answer ✔a. as the length of
time until an exepcted cash flow increases, the stock price decreases
The income statement:
a. is a financial statement that shows the firm's financial position at a particular
point in time
b. is a financial statement that summarizes a firm's revenues and expenses
over a period of time
c. is a financial statement that summarizes a firm's revenues and expenses at
a patricular point in time
d. details the firm's assets and liabilities over a period of time - correct answer
✔b. is a financial statement that summarizes a firm's revenues and expenses
over a period of time
Each of the following items is a liability with the exception of:
a. long-term debt
b. notes payable
c. prepaid expenses
d. accrued expenses - correct answer ✔c. prepaid expenses
, Given the following information, calculate earnings per share:
Interest Expense - 40,000
Net Income - 400,000
Preferred dividends paid - 65,000
Common dividends paid - 100,000
Common Stock Oustanding - 100,000
a. 1.95
b. 3.35
c. 2.35
d. 3.60 - correct answer ✔b. 3.35
Depreciation:
a. is not a true expense
b. represents a cash outflow on the cash flow statement
c. is deducted from net income
d. is a tax deductible non-cash expense - correct answer ✔d. is a tax
deductible non-cash expense
As the discount rate decreases, the present value of a positive cash flow to be
received at a particular time in the future:
a. gets closer to zero
b. gets larger
c. stays unchanged
