FIN 370 Finance For Business Final Exam

| March 23, 2015

 

FIN 370 FINAL EXAM QUESTIONS

True False

  1. Profit maximization stresses the efficient use of timing and risks.
  2. Financial assets are tangible assets such as houses, equipment, and inventories.
  3. The sustainable rate of growth represents the rate at which a firm’s sales can grow if it wants to maintain its present financial ratios and does not want to resort to a sale of new equity shares
  4. Business risk refers to the relative disperses in the firm’s expected earnings after interest and taxes
  5. New capital-budgeting projects are always new products taken to market.
  6. The stock of cash is a type of inventory.
  7. If an asset is sold above depreciated value, it may be used to offset gains and thus result in tax savings.
  8. Free cash flow is the cash flow in excess of that required to fund all projects with positive and negative net present value when discounted at the relevant cost of capital.
  9. The Euro eliminated exchange costs and exchange rate fluctuations
  10. The foreign exchange market is like the New York Stock Exchange because they are both physical entities.

Multiple Choice Questions

  1. Which of the following measure an organization’s liquidity?
  2. If I invest $1000 at an interest rate of 2% what would the future value be after 5 years?
  3. Burns Promotions Plus has an annuity that pays $2500 at the beginning of the next 4 years what is the future value of the annuity if the interest rate is 5%?
  4. Grover’s Vinyl Siding has a $2000 loan that needs to be repaid in 3 equal installments at the end of the next three years with an interest rate of 6%; what would the requested payment be?
  5. Plexus Pictures collects 70% of its sales during the month of sales, 20% one month after the sales and 10% two months after the sale. The company expects sales of $15,000 in August; $25,000 in September; $10,000 in October; and $50,000 in November How much money will they collect in October?
  6. The significance of a ratio can only be truly appreciated Except when:
  7. Which is not a type of ratio?
  8. Burns Promotions Plus has a cost of revenue of $219,793 million for the fiscal year ended January 31, 2008. It had an inventory balance of $29,447 million at the end of this fiscal year. Based on this information what is the number of days inventory for the year 2007 (ending January 31, 2008).
  9. Burns Promotions Plus has a cost of revenue of $219,793 million for the fiscal year ended January 31, 2008. It had an inventory balance of $29,447 million at the end of this fiscal year. Based on this information what is the inventory turnover for the year 2007 (ending January 31, 2008).
  10. What is working capital?
  11. Euro was introduced because of the following EXCEPT?

PROBLEMS. Provide back-up of your work on a separate worksheet so that credit can be assigned. You may provide either a Word document or an Excel spreadsheet.

  1. Based on the above information:
  2. Based on the above information:

 

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