20 multiple choice questions in one hour , it is about Corporate Valuation ( finance major)

Business Finance

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20 multiple choice questions in one hour , it is about Corporate Valuation ( finance major)

I provide some sample questions in the file, please read carefully that you are confident with these kind questions.

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Sample Questions 1. DDD had Accumulated Depreciation of $620,000 at the beginning of fiscal year 2003. At the end of fiscal year 2003 it had a balance of $710,000. If in 2003 DDD retired no old assets, bought no new assets, and used an average l0% depreciation rate, the fixed assets of DDD at the beginning of fiscal year 2003 were: a. $800,000 *b. $900,000 c. $1,330,000 d. $6,200,000 2. In accrual-basis accounting, product warranty expenses are recorded a. When the product is produced *b. When the product is sold c. When full payment for the sale is collected d. When actual expenses per the warranty are incurred 3. Which of the following is NOT a leading economic indicator: a. New housing building permits b. Stock prices c. Initial claims for unemployment *d. Gross Domestic Product (GDP) 4. You have estimated the following relation between annual changes in per-capita GDP (CGDP, measured in percentage points) and per-capita annual expenditures clothing- (CLT, measured in dollars per annum): CLT= 80+ 72*CGDP Macro-analysts predict that next year's per-capita GDP will be $21,000 versus this year's level of $20,000. Moreover, the current population of 250 million is expected to grow next year by 1%. If no change in the price level is projected for next year, based on these relations you predict that total expenditures on clothing next year will be a. $100,000 million b. $110,000million *c. $111,100 million d. $120,000 million 5. Sales growth Initial Sales Fixed Assets (at cost) to Sales Non-cash Current Assets to Sales Current Liabilities to Sales COGS to Sales Interest on Debt Interest on Cash, Mkt. Securities Dividend payout Tax rate Depreciation rate Target Debt/Asset ratio 0.15 1000 0.8 0.15 0.05 0.75 0.1 0.05 0.5 0.4 0.1 0.63 0.75 0.7 0.65 0.7 0.75 YEAR P&L Sales Cost of Goods Sold Depreciation Debt Interest Interest on Cash, Mkt. Securities Profit before Tax Taxes Profit after Tax Dividend Retained Earnings 0 1 2 3 4 5 1000 1150 -863 -100 -40 15 162 -65 97 -49 49 1323 -992 -92 -40 15 225 -90 135 -68 68 1521 -1141 -106 -40 15 252 -101 151 -76 76 1749 -1312 -122 -40 15 280 -112 168 -84 84 2011 -1509 -140 -40 15 310 -124 186 -93 93 100 150 294 173 298 198 301 228 301 262 298 302 1000 -300 700 950 920 -400 520 986 1058 -492 566 1062 1217 -598 619 1148 1399 -719 680 1243 1609 -859 750 1349 50 400 58 400 66 400 76 400 87 400 101 400 380 380 380 380 380 380 BALANCE SHEET Cash and Marketable Securities Current Assets Fixed Assets At Cost Accumulated Depreciation Net Fixed Assets Total Assets Current Liabilities Debt Equity Stock Accumulated Retained Earnings Total Liabilities 100 930 149 986 216 1062 292 1148 376 1243 469 1349 Suppose the firm decides to increase its dividend payout from 50% to l00%. What will be the effect of this change on the Free Cash Flows (FCF) of the firm? a. The FCF will decrease as a result of higher interest on Debt. *b. The FCF is not affected by the financial decisions of the firm. c. The FCF will decrease as a result of the reduction on Cash and Marketable Securities d. The FCF will be higher since the shareholders receive higher returns. ...
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