I HAVE A MIDTERM EXAM IT IS TIMED. LIMIT IS 4 HOURS. ONCE I START THE CLOCK STARTS. IS THERE SOMEONE AVAILABLE TO DO THIS IMMEDIATELY AFTER SUBMISSION
Uptown Developers is considering two projects. Project A consists of building a wholesale book outlet on the firm's downtown lot. Project B consists of building a sit-down restaurant on that same lot. The lot can only accommodate one of the projects. When trying to decide whether to build the book outlet or the restaurant, management should rely most heavily on the analysis results from which one of these methods? A. Profitability index B. Internal rate of return C. Payback D. Net present value E. Accounting rate of return Changes in net working capital A. are included in project analysis only if they represent cash outflows. B. only affect the initial cash flows of a project. C. can affect the cash flows of a project every year of the project's life. D. are generally excluded from project analysis due to their irrelevance to the total project. E. affect the initial and the final cash flows of a project but not the cash flows of the middle years. Which one of the following is an example of an incremental cash flow for Project A? A. Insurance on a building the company currently owns that will house the operations for Project A B. Property taxes on a currently owned warehouse that has been sitting idle but is going to be utilized by Project A C. Cost of the test marketing to ascertain whether or not Project A is feasible D. Rental cost of some new machinery that will be acquired for Project A E. Contractual annual salary of the company president Which statement is correct regarding amortized loans with equal payments? A. If you pay more than the scheduled amount, the additional payment will reduce the total interest paid over the life of the loan. B. The final loan payment will all be applied to the outstanding principal balance. C. The interest is paid only at loan maturity. D. If you pay more than the scheduled amount, the additional payment will increase the remaining principal balance. E. The principal portion of each payment will decrease over time. The discounted payback period of a project will decrease whenever the A. initial cash outlay for the project is increased. B. amount of each projected cash inflow is decreased. C. discount rate applied to the project is decreased. D. time period of the project is increased. E. costs of the fixed assets utilized in the project increase. ________ is calculated by adding back noncash expenses to earnings before interest and taxes, subtracting taxes, and adjusting for any changes in total assets or current liabilities that affect cash flows. A. Distributable cash flow B. Capital spending C. Cash flow from assets D. Cash flow from investing activities E. Cash flow to creditors When creating pro forma statements, the changes in the liabilities and owners' equity sections depend primarily on the firm's A. financing policies. B. interest rates and financing policies. C. dividend and financing policies. D. retained earnings policies. E. rate of sales growth. North & South RR bonds bear a coupon rate of 5.5 percent, payable annually. The bonds mature in 6.5 years, sell at par, and have a $1,000 face value. What is the yield to maturity? A. 5.59% B. 5.86% C. 5.50% D. 5.42% E. 5.71% Differential growth refers to the stock of a firm that increases its dividend by A. three or more percent per year. B. a stated percent each year. C. a rate that is expected to be sustainable indefinitely. D. an amount in excess of $.25 per year. E. varying rates over a period of time. You are comparing the returns of two portfolios for a 10-year period. Portfolio I has a lower dispersion of returns and a higher average rate of return than Portfolio II. Given this, what do you know with certainty? A. Portfolio I has a lower standard deviation than Portfolio II. B. Portfolio I is riskier than Portfolio II. C. Portfolio II has less total risk than Portfolio I. D. Portfolio I will outperform Portfolio II over the next 10 years. E. Portfolio II consists of more individual stocks than Portfolio I. The capital market line A. assumes investors can borrow, but not lend, at the risk-free rate. B. depicts the highest rate of return for every level of risk given only a single portfolio of risky assets. C. intersects its graph at the origin and is linear in nature. D. intersects the vertical axis at the risk-free rate. E. intersects the risky portfolio at that portfolio's lowest risk point. A firm has a total debt ratio of 0.47. This means the firm has $0.47 in debt for every A. $.53 in equity. B. $1.47 in total assets. C. $1.53 in total assets. D. $1 in total equity. E. $1.47 in total equity. A crossover bond is a bond that A. was previously in default but is now current with its debt obligations. B. was issued by a non-U.S. entity but is held by a U.S. party. C. has both an investment-grade and a low-grade rating. D. was issued as investment-grade but is currently rated as low-grade. E. is rated by both a U.S. and a non-U.S. rating agency. Which of the following should be included in the analysis of a proposed project? A. Incremental and sunk costs only B. Opportunity costs, erosion, and sunk costs C. Opportunity costs and synergy only D. Synergy, erosion, opportunity costs, and incremental costs E. Incremental costs minus any sunk costs plus synergy ______bonds pay interest that is taxed only at the federal level. A. Municipal B. Corporate C. Treasury D. Mortgage E. Zero coupon Which one of the following accounts is generally the most liquid? A. Patent B. Building C. Accounts receivable D. Equipment E. Inventory For an individual investor, the ideal portfolio could best be described as the portfolio that A. has the lowest standard deviation given a specific expected rate of return. B. lies above and to the left of the feasible set. C. produces the highest rate of return. D. qualifies as the minimum variance portfolio. E. lies within the feasible set. What is the key reason why a positive NPV project should be accepted? A. The project is expected to increase shareholder value. B. The present value of the expected cash flows equals the project's cost. C. The project will produce positive cash flows in the future. D. The project's payback will be positive during its life. E. The project's PI will be less than 1, which indicates acceptance. Based on the dividend growth model, an increase in investors' overall level of required returns will A. cause the market values of all stocks to decrease, all else held constant. B. not affect overall stock market prices. C. cause dividend growth rates to increase to offset this change. D. cause non–dividend-paying stocks to decrease in price while dividend-paying stock prices remain constant. E. cause some stock prices to rise while others fall. Which one of these statements related to the time value of money is correct? Assume a positive rate of interest. A. A dollar increases in value the further into the future it is received. B. The future value of an invested dollar is inversely related to the rate of interest. C. The present value of a dollar to be received in 1 year is directly related to the interest rate. D. A dollar received today is more valuable than a dollar received next month. E. A dollar invested today will increase in value in a linear manner if interest earned is reinvested. An annuity stream where the payments occur forever is called a(n. A. annuity due. B. indemnity. C. perpetuity. D. amortized cash flow stream. E. ordinary annuity. The return earned in a typical year over a multiyear period is called the ________ average return. A. arithmetic B. standard C. variant D. geometric E. real The two most commonly used methods of capital budgeting analysis are the A. internal rate of return and net present value methods. B.