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BUSN 379 BUSN379 BUSN/379 ENTIRE COURSE HELP – DEVRY UNIVERSITY
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BUSN 379 BUSN379 BUSN/379 ENTIRE COURSE HELP – DEVRY UNIVERSITY
BUSN 379 Complete Class
BUSN 379 Course Project Part 1 and 2
BUSN 379 Final Exam
BUSN 379 Finance Week 1-7 Homework Solution
BUSN 379 Midterm Exam
BUSN 379 Week 1
BUSN 379 Week 5 Homework
BUSN 379 Week 8 Final Exam
Description
BUSN 379 BUSN379 BUSN/379 ENTIRE COURSE HELP – DEVRY UNIVERSITY
BUSN 379 Complete Class
BUSN 379 Course Project Part 1 and 2
BUSN 379 Final Exam
BUSN 379 Finance Week 1-7 Homework Solution
BUSN 379 Midterm Exam
BUSN 379 Week 1
BUSN 379 Week 5 Homework
BUSN 379 Week 8 Final Exam
BUSN 379 BUSN379 BUSN/379 ENTIRE COURSE HELP – DEVRY UNIVERSITY
BUSN 379 Complete Class
BUSN 379 Week 1 Case Study Consumer Behavior
BUSN 379 Week 1 Homework
BUSN 379 Week 2 Case Study
BUSN 379 Week 2 Homework Chapter 11; 4, 7, 17, and 29.doc
BUSN 379 Week 2 Homework
BUSN 379 Week 3 Homework
BUSN 379 Week 4 Case Study II Ch. 5
BUSN 379 Week 4 Homework
BUSN 379 Week 5 Case Study
BUSN 379 Week 5 Homework
BUSN 379 Week 6 Case Study III Chapter 8
BUSN 379 Week 6 Homework
BUSN 379 Week 7 Case Study
BUSN 379 Week 7 Homework
BUSN 379 Midterm Exam
BUSN 379 Final Exam
BUSN 379 BUSN379 BUSN/379 ENTIRE COURSE HELP – DEVRY UNIVERSITY
BUSN 379 Course Project Part 1 and 2
BUSN 379 79 Course Project Part 1 and 2
BUSN 379 BUSN379 BUSN/379 ENTIRE COURSE HELP – DEVRY UNIVERSITY
BUSN 379 Final Exam
1. (TCO 4) Which of the following is true regarding the evaluation of projects? (Points: 4)
2. (TCO 4) Which of the following investment ranking methods does not consider the time value of money? (Points: 4)
3. (TCO 3 and 4) The net present value is: (Points: 4)
4. (TCO 3 and 4) What is the net present value of a project with the following cash flows, if the discount rate is 10 percent?
5. (TCO 4) Leward Manufacturing is spending $115,000 to update its equipment. This is necessary if the firm wishes to be competitive in the marketplace and provide a wide array of product models. The company estimates that these updates will improve its cash inflows by $27,500 a year, for eight years. What is the payback period? (Points: 4)
6. (TCO 4) Ignoring the option to expand: (Points: 4)
overestimates the internal rate of return on a project.
7. (TCO 4) ___________, occurs when a firm cannot raise financing for a project under any circumstances. (Points: 4)
8. (TCO 4) ABC Cameras is considering an investment that will have a cost of $10,000 and the following cash flows: $6,000 in year 1, $4,000 in year 2 and $3,000 in year 3. Assume the cost of capital is 10%. Which of the following is true regarding this investment? (Points: 4)
9. (TCO 4) Assume Company X plans to invest $60,000 in industrial equipment. Using Tables 9.6 and 9.7 of your textbook (Page 277), which is the first year depreciation amount under MACRS? (Points: 4)
10. (TCO 1 and 4) Assume a project has earnings before depreciation and taxes of $120,000, depreciation of $40,000, and that the firm has a 30 percent tax bracket. What are the after-tax cash flows for the project? (Points: 4)
11. (TCO 8) Which of the following factors will affect the expected rate of return on a security? (Points: 4)
12. (TCO 8) Which statement is not true regarding risk? (Points: 4)
the expected return is usually not the same as the actual return
13. (TCO 8) The stock of Chocolate Galore is expected to produce the following returns, given the various states of the economy. What is the expected return on this stock?
(Points: 4)
7.33 percent
9.82 percent
11.26 percent
11.33 percent
11.50 percent
14. (TCO 8) You own a portfolio that consists of $8,000 in stock A, $4,600 in stock B, $13,000 in stock C, and $5,500 in stock D. What is the portfolio weight of stock B? (Points: 4)
15. (TCO 8) You currently own a portfolio valued at $24,000 that has a beta of 1.1. You have another $8,000 to invest, and would like to invest it in a manner such that the risk of the new portfolio matches that of the overall market. What does the beta of the new security have to be? (Points: 4)
. 1. (TCO 8) Company insiders cannot earn excess profits based on the knowledge they have related to their employer if the financial markets are: (Points: 4)
2. (TCO 5) Royal Petroleum Co. can buy a piece of equipment that can be financed with debt at an after-tax cost of 8 percent and common equity at a cost of 20 percent. Assume debt and common equity each represent 50 percent of the firm’s capital structure. What is the weighted average cost of capital? (Points: 4)
3. (TCO 5, 6 and 7) An issue of common stock’s most recent dividend is $3.75. Its growth rate is eight percent. What is its price if the market’s rate of return is 16 percent? (Points: 4)
4. (TCO 5, 6 and 7) Which of the following is not true regarding the cost of debt? (Points: 4)
5. (TCO 5) Retained earnings has a cost associated with it because: (Points: 4)
new funds must be raised.
6. (TCO 4) A project has the following cash flows. What is the internal rate of return?
7. (TCO 5, 6 and 7) Which one of the following is a correct statement? (Points: 4)
Current tax laws favor debt financing.
8. (TCO 5, 6 and 7) The six percent preferred stock of FKH Manufacturing is selling for $62 a share. What is the firm’s cost of preferred stock, if the tax rate is 34 percent and the par value per share is $100? (Points: 4)
9. (TCO 2) Which one of the following occurs if a firm files for Chapter 7 bankruptcy, but does not generally occur if the firm files for Chapter 11 bankruptcy? (Points: 4)
10. (TCO 5) Which of the following statements is false regarding the cost of capital? (Points: 4)
11. (TCO 2) Select any actions that do not affect the cash account. (Points: 4)
12. (TCO 2) Which of the following statements is true? (Points: 4)
The optimal credit policy minimizes the total cost of granting credit.
13. (TCO 2) Which one of the following industries is most apt to have the shortest cash cycle? (Points: 4)
14. (TCO 2) Delphinia’s has the following estimated quarterly sales for next year. The accounts receivable period is 30 days. What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days.
15. (TCO 1) Which of the following statements is true regarding the goal of financial management? (Points: 4)
2. (TCO 1) Book values are different from market values because: (Points: 4)
3. (TCO 1) Use the following tax table to answer this question:
McKenzie, Inc. earned $144,320 in taxable income for the year. What is the company’s approximate average tax rate? (Points: 4)
4. (TCO 3) Regional Bank offers you an APR of 19 percent compounded semiannually, and Local Bank offers you an EAR of 20.10 percent for a new automobile loan. You should choose ______________ because its _______ is lower. (Points: 4)
5. (TCO 3) You deposited $11,000 in your bank account today. Which of the following will decrease the future value of your deposit, assuming that all interest is reinvested? Assume the interest rate is a positive value. Select all that apply: (Points: 4)
6. (TCO 3) Thirteen years from now, you will be inheriting $30,000. What is this inheritance worth to you today, if you can earn four percent interest compounded annually? (Points: 4)
7. (TCO 3) The new home that you want to buy costs $249,500. You plan to make a cash down payment of 20 percent and finance the balance over 10 years at 6.75 percent. What will be the amount of your monthly mortgage payment? (Points: 4)
8. (TCO 3) Amy borrowed $5,000 from her bank three years ago. The loan term is five years. Each year, Amy must repay the bank $1,000 plus the annual interest. Which type of loan does Amy have? (Points: 4)
9. (TCO 3) Fanta Cola has $1,000 par value bonds outstanding at 12 percent interest. The bonds mature in 25 years. What is the current price of the bond if the YTM is 13 percent? Assume annual payments. (Points: 4)
10. (TCO 6) The market where new securities are offered is called the _____ market. (Points: 4)
primary
11. (TCO 7) A taxpaying, levered firm’s optimal capital structure: (Points: 4)
is 100 percent equity financing.
12. (TCO 3) What is the approximate yield to maturity for a seven-year bond that pays 11 percent interest on a $1000 face value annually if the bond sells for $952? (Points: 4)
13. (TCO 8) Which of the following is true regarding bonds? (Points: 4)
14. (TCO 8) Two years ago, MorningStar Company issued seven percent, 25-year bonds and Track, Inc. issued seven percent, 10-year bonds. Since their time of issue, interest rates have increased. Which of the following statements is true of each firm’s bond prices in the market,
15. (TCO 6) Star Industries has one bond issue outstanding. An indenture provision prohibits the firm from redeeming the bonds during the first two years. This provision is referred to as a _____ provision. (Points: 4)
1. (TCO 6) Which of the following is true regarding put bonds? (Points: 4)
2. (TCO 6 and 7) Financial leverage deals with: (Points: 4)
3. (TCO 6) Company A has a bond outstanding with $90 annual interest payment, a market price of $820, and a maturity date in five years. Assume the par value to be $1,000. What is the bond’s yield to maturity? (Points: 4)
4. (TCO 2) Which one of the following practices will reduce a firm’s collection float? (Points: 4)
utilizing zero-balance accounts
depositing checks weekly, rather than daily
requiring all customers pay by check, rather than with cash
installing a lockbox system
paying all bills five days sooner
5. (TCO 2) ___________, is a system that minimizes inventory. (Points: 4)
material requirements planning
ABC approach
just in time
reorder points
6. (TCO 1) Provide three examples of recent well-known unethical behavior cases. Explain the situation in one or two paragraphs. How do you believe that this behavior affected the firm’s value? (Points: 10)
7. (TCO 4) What are sunk costs? Provide at least two real-life examples of sunk costs for a project. Should sunk costs be included as incremental cash flows? Why or why not? Explain your rationale. (Points: 10)
.
8. (TCO 8) What is the difference between systematic and unsystematic risk? Provide one example of each. Can both systematic and unsystematic risks be diversified? Why or why not? (Points: 10)
9. (TCO 2) What are some important elements of the collection policy? (Points: 10)
10. (TCO 6 and 7) How can you calculate the cost of debt? What methods can you use? Provide at least two examples. (Points: 10)
BUSN 379 BUSN379 BUSN/379 ENTIRE COURSE HELP – DEVRY UNIVERSITY
BUSN 379 Finance Week 1-7 Homework Solution
BUSN 379 Finance Week 1 Homework Solution
BUSN 379 Finance Week 2 Homework Solution
BUSN 379 Finance Week 3 Homework Solution
BUSN 379 Finance Week 4 Homework Solution
BUSN 379 Finance Week 5 Homework Solution
BUSN 379 Finance Week 6 Homework Solution
BUSN 379 Finance Week 7 Homework Solution
BUSN 379 BUSN379 BUSN/379 ENTIRE COURSE HELP – DEVRY UNIVERSITY
BUSN 379 Midterm Exam
1. (TCO 1) What is the goal of financial management for a sole proprietorship? (Points : 3)
decrease long-term debt to reduce the risk to the owner
maximize net income given the resources of the firm
maximize the market value of the equity
minimize the tax impact on the proprietor
minimize costs and increase production
2. (TCO 1) Working capital management includes which of the following? (Points : 3)
establishing the inventory level
deciding when to pay suppliers
determining the amount of cash needed on a daily basis
establishing credit terms for customers
all of the above
3. (TCO 1) Market value reflects which of the following: (Points : 3)
The amount someone is willing to pay today for an asset.
The value of the asset based on generally-accepted accounting principles.
The asset’s historical cost.
A and B only
None of the above
4. (TCO 1) Which of the following is true regarding income statements? (Points : 3)
It shows the revenue and expenses, based upon selected accounting methods.
It reveals the net cash flows of a firm over a stated period of time.
It reflects the financial position of a firm as of a particular date.
It records revenue only when cash is received for the product or service provided.
It records expenses based on the recognition principle
5. (TCO 1) Tato’s Pizza has sales of $625,000. They paid $43,000 in interest during the year and depreciation was $79,000. Administrative costs were $100,000 and other costs were $160,000. Assuming a tax rate of 35 percent, what is Tato’s Pizza net income?
(Points : 3)
$157,950
$322,000
$243,000
$200,000
6. (TCO 1) Home Best Hardware had $315,000 in taxable income last year. Using the tax rates provided in Table 2.3, what is the marginal tax rate?(Points : 3)
35%
39%
34%
32%
7. (TCO 1) Pizza A had earnings after taxes of $390,000 in the year 2008 and 300,000 shares outstanding. In year 2009, earnings after taxes increased by 20 percent to $468,000 and 25,000 new shares were issued for a total of 325,000 shares. What is the EPS figure for 2008? (Points : 3)
$1.30
$1.44
$0.77
$0.69
8. (TCO 1) The income statement reflects: (Points : 3)
income and expenses at the time when those items affect the cash flows of a firm.
income and expenses in accordance with GAAP.
the cash flows in accordance with GAAP.
the flow of cash into and out of a firm during a stated period of time.
the flow of cash into and out of a firm as of a particular date
9. (TCO 1) Print Imaging has EBIT of $150,000, interest of $30,000, taxes of $50,000, and depreciation of $50,000. What is the company’s operating cash flow? (Points : 3)
$120,000
$180,000
$170,000
$150,000
$120,000
10. (TCO 3) Mark deposited $1,000 today, in an account that pays eight percent interest, compounded semi-annually. Which one of the following statements is correct concerning this investment? (Points : 3)
Mark will earn more interest in year 4 than he will in year 3.
Mark will receive equal interest payments every six months over the life of the investment.
Mark would have earned more interest if he had invested in an account paying 8 percent simple interest.
Mark would have earned more interest if he had invested in an account paying annual interest.
Mark will earn less and less interest each year over the life of the investment
11. (TCO 3) Mr. Smith will receive $7,500 a year for the next 14 years from his trust. If the interest rate on this investment is eight percent, what is the approximate current value of these future payments? (Points : 3)
$61,800
$53,500
$113,400
$97,200
12. (TCO 3) Your neighbor just received a credit offer in an e-mail. The company is offering him $6,000 at 12.8 percent interest. The monthly payment is only $110. If he accepts this offer, how long will it take him to pay off the loan? (Points : 3)
81.00 months
81.50 months
83 months
82.17 months
90.70 months
13. (TCO 3) Fine Oak Woodworks is considering a project that has cash flows of $5,000, $3,000, and $8,000 for the next three years. If the appropriate discount rate of this project is 10 percent, which of the following statements is true? (Points : 3)
The current value of the project’s inflows is $16,000
The approximate current value of the project’s inflows is $13,000
The current value of the project’s inflows is somewhere in between $14,000 and $16,000
The project should be rejected because its present value is negative
14. (TCO 4) You are considering two investments. Investment I is in a software company, and Investment II is an engineering company. The investments offer the following cash flows:
Year Software Company Engineering Company
If the appropriate discount rate is 10 percent, what is the approximate present value of the Engineering Company investment? (Points : 3)
$33,200
$34,500
$42,000
$43,500
15. (TCO 3) North Bank offers you an APR of 9.76 percent compounded semiannually, and South Bank offers you an effective rate of 9 percent on a business loan. Which bank should you choose and why? (Points : 3)
South Bank because its effective rate is higher.
North Bank because the APR is lower.
South Bank because its effective rate is lower.
North Bank because its effective rate is lower
1. (TCO 3) Tim needs to borrow $5,000 for two years. The loan will be repaid in one lump sum at the end of the loan term. Which one of the following interest rates is best for Tim? (Points : 3)
7.5 percent simple interest
7.5 percent interest, compounded monthly
8.0 percent simple interest
8.0 percent interest, compounded annually
8.0 percent interest, compounded monthly
2. (TCO 3) Which one of the following is an example of an annuity, but not a perpetuity? (Points : 3)
unequal payments each month, for 18 months
payments of equal amount each quarter forever
unequal payments each year forever
equal payments every six months for 48 months
unending equal payments every other month
3. (TCO 3) Fanta Cola has $1,000 par value bonds outstanding at 12 percent interest. The bonds mature in 25 years. What is the current price of the bond if the YTM is 16 percent? Assume annual payments. (Points : 3)
$1315
$1300
$756
$1000
4. (TCO 6 and 8) Which one of the following statements is correct? (Points : 3)
Bond issuers maintain a listing of bondholders when bonds are issued in bearer form.
An indenture, is a contract between a corporation and its shareholders.
Collateralized bonds are called debentures.
The description of any property used to secure a bond issue is included in the bond indenture
5. (TCO 3) Bonds issued by Blue Sky Airlines have a face value of $1,000 and currently sell for $1,180. The annual coupon payments are $125. If the bonds have 20 years until maturity, what is the approximate YTM of the bonds? (Points : 3)
10.50%
11.50%
11.75%
12%
6. (TCO 3) Bean Coffee issued preferred stock many years ago. It carries a dividend of $8 per share, fixed. As time has passed, yields have decreased from the original eight percent (at the time of issuance) to six percent. What was the current price of the stock? Hint: Yield is the same as required rate of return. (Points : 3)
$100
$133
$102
$86.40
None of the above
7. (TCO 3) Intelligence Research, Inc. will pay a common stock dividend of $1.60 at the end of the year. The required rate of return by common stockholders is 13 percent. The firm has a constant growth rate of seven percent. What is the current price of the stock? (Points : 3)
$23
$32
$27
$29
8. (TCO 3) Royal Electric paid a $4 dividend last year. The dividend is expected to grow at a constant rate of six percent over the next four years. Common stockholders require a 13 percent return. What are the values of the dividends for years 1, 2 and 3, respectively? (Points : 3)
$4, $4.5 and $4.8
$4.24, $4.76 and $5.05
$4.24, $4.49, $4.76
$4, $4.50, $5.05
9. (TCO 6) Which of the following is true regarding the primary market? (Points : 3)
it is the market where the largest number of shares are traded on a daily basis.
it is the market in which the largest number of issues are listed.
it is the market with the largest number of participants.
it is the market where new securities are offered.
it is the market where shareholders trade most frequently with each other
10. (TCO 6) A member of the NYSE who trades on the floor of the exchange for his or her personal account is called a(n): (Points : 3)
specialist.
independent broker.
floor trader.
stand-alone agent.
dealer
11. (TCO 6) The annual interest on a bond divided by the bond’s market price is called the: (Points : 3)
yield to maturity.
yield to call.
total yield.
required yield.
current yield
12. (TCO 6) Star Industries has one outstanding bond issue. An indenture provision prohibits the firm from redeeming the bonds during the first two years. This provision is referred to as a _____ provision. (Points : 3)
deferred call
market
liquidity
debenture
sinking fund
13. (TCO 8) Which of the following is true regarding bonds? (Points : 3)
Most bonds do not carry default risk.
Municipal bonds are free of default risk.
Bonds are not sensitive to changes in the interest rates.
Moody’s and Standard and Poor’s provide information regarding a bond’s interest rate risk.
None of the above is true
14. (TCO 6) Which of the following is not a floating-rate bond? (Points : 3)
A bond that adjusts the coupon payments based on an interest rate index, such as the T-bill.
An EE Savings Bond issued by the U.S. government.
A bond that does not have any coupons until maturity.
A bond that adjusts the coupon and face value payment based on inflation.
TIPS
15. (TCO 6) Which of the following is true regarding put bonds? Select all that apply: (Points : 3)
Have coupons that depend on the company’s income
Can be exchanged for a fixed number of shares before maturity only
Can be exchanged for a fixed number of shares before maturity
Allow the holder to require the issuer to buy the bond back
1. (TCO 1) In a general partnership, each partner is personally liable for: (Points : 3)
the partnership debts that he or she personally obtained for the firm.
his or her proportionate share of all partnership debts, regardless of which partner incurred that debt.
the total debts of the partnership, even if he or she was unaware of those debts.
the debts of the partnership, up to the amount he or she invested in the firm.
all personal and partnership debts incurred by any partner, even if he or she was unaware of those debts
2. (TCO 1) Trademarks are classified as: (Points : 3)
short-term assets.
current liabilities.
long-term debt.
tangible fixed assets.
intangible fixed assets
1. (TCO 1) Can you provide some examples of recent, well-known unethical behavior cases? Explain the situation in one or two sentences.
2. What are some real-life scenarios where you can apply the time value of money? Present two or three scenarios. Briefly explain your rationale.
3. Explain some of the key risks associated with bonds.
4. What are some of the features of zero-coupon bonds that make them attractive to certain investors? Which type of investors will be most interested in these bonds?
BUSN 379 BUSN379 BUSN/379 ENTIRE COURSE HELP – DEVRY UNIVERSITY
BUSN 379 Week 1
1. (TCO 1) Which of the following statements is true regarding the goal of financial management?
2. (TCO 1) Book values are different to market values because:
3. For this question, use the information for Sports Baseballs, Inc. Sports Baseballs, Inc. is a corporation that manufacturers and sells baseballs across several states in the Southeast. It had sales of $2.7 million during the last year. Expenses were as follows:
Cost of goods sold…………………………. $1.2 million
Administrative expenses…………………… $250,000
Marketing and selling expenses…………… $175,000
Depreciation…………………………………. $500,000
Interest expense……………………………. $200,000
Dividends paid………………………………. $150,000
(TCO 1) Suppose that Sports Baseball has 30,000 shares of stock. What is the dividends per share figure?
4. For this question, use the information for Sports Baseballs, Inc. Sports Baseballs, Inc. is a corporation that manufacturers and sells baseballs across several states in the Southeast. It had sales of $2.7 million during the last year. Expenses were as follows:
Cost of goods sold…………………………. $1.2 million
Administrative expenses…………………… $250,000
Marketing and selling expenses…………… $175,000
Depreciation…………………………………. $500,000
Interest expense……………………………. $200,000
Dividends paid………………………………. $150,000
(TCO 1) Assuming a tax rate of 30%, the percentage of dividends per net income is approximately ______ and operating cash flow is _________ than net income.
Hint: You need to calculate the net income and divide dividends by the net income.
5. For this question, use the information for Sports Baseballs, Inc. Sports Baseballs, Inc. is a corporation that manufacturers and sells baseballs across several states in the Southeast. It had sales of $2.7 million during the last year. Expenses were as follows:
Cost of goods sold…………………………. $1.2 million
Administrative expenses…………………… $250,000
Marketing and selling expenses…………… $175,000
Depreciation…………………………………. $500,000
Interest expense……………………………. $200,000
Dividends paid………………………………. $150,000
(TCO 1) Select all items that will be included in Sports Baseballs, Inc. Balance Sheet. For this exercise you will be choosing more than one option for your answer:
6. (TCO 1) Which one of the following activities best exemplify working capital management. For this exercise you will be choosing more than one option for your answer:
7. (TCO 1) Match the following terms with the examples as appropriate:
8. (TCO 1) Which incentives do managers have to act in the stockholder’s interest? Name two and explain each in one or two sentences.
BUSN 379 BUSN379 BUSN/379 ENTIRE COURSE HELP – DEVRY UNIVERSITY
BUSN 379 Week 5 Homework
1. (TCO 8) Over the period of 1955-2006:
2. (TCO 8) Based on the efficient market hypothesis, all “informed” investors will earn:
3. (TCO 8) Which of the following factors will affect the expected rate of return on a security? Select all that apply:
4. (TCO 8) Assume a project that has the following returns for years 1 to 5: 15%, 4%, -13%, 34%, and 17%. What is the approximate standard deviation of this investment?
5. (TCO 8) Assume you are considering investing in two stocks, A & B. Stock A has an expected return of 16% and Stock B has an expected return of 9.5%. Your goal is to create a two-security portfolio that will have an expected return of 12%. If you have $250,000 to invest today, approximately how much would you invest in Stock B?
6. (TCO 8) For this exercise, use the information provided for Problem 30 of Chapter 11 (page 375 of your textbook). Assume that the probability of the state of the economy has changed as follows:
The probability of a recession has increased to 30% and the probability for a normal state of economy is now 40%. The market risk premium has increased by 1% as well. What is the beta of Stock I and II respectively?
7. (TCO 8) For this exercise, use the information provided for Problem 30 of Chapter 11 (page 375 of your textbook). Assume that the probability of the state of the economy has changed as follows:
The probability of a recession has increased to 30% and the probability for a normal state of economy is now 40%. The market risk premium has increased by 1% as well. Which statement is true? Select all that apply
8. (TCO 8) Which statements are true regarding risk? Select all that apply:
9. (TCO 8) What is systematic risk? Provide two or three examples. How can you diversify it?
BUSN 379 BUSN379 BUSN/379 ENTIRE COURSE HELP – DEVRY UNIVERSITY
BUSN 379 Week 8 Final Exam
1.(TCO 1) Lifeline, Inc., has sales of $685,000, costs of $273,000, depreciation expense of $51,000, interest expense of $60,000, and a tax rate of 35 percent. What is their net INCOME?
2. (TCO 1) Handler, Inc., has sales of $19,430, costs of $9,460, depreciation expense of $2,230, and interest expense of $1,620. If the tax rate is 35 percent, what is the operating cash flow, or OCF?
3. (TCOs 2 and 3) Bey Co. issued 20-year, $1,000 bonds at a coupon rate of 7 percent. The bonds make annual payments. If the YTM on these bonds is 5 percent, what is the current bond price?
(TCO 3) Seventeenth Bank has an issue of 9% preferred stock with a $100.00 par value that just sold for $119 per share. What is the bank’s cost of preferred stock? (Show your work and round your answer to two decimal places.
(TCOs 3 and 5) You own a portfolio that has $1,500 invested in Stock A and $2,600 invested in Stock B. If the expected returns on these stocks are 10 percent and 16 percent, respectively, what is the expected return on the
portfolio? (Show your work.)
TCO 3) A stock has a beta of 1.25, the expected return on the market is 12 percent, and the risk-free rate is 2 percent. What must the expected return on this stock be? (Show your work.)
(TCO 4) Suppose Pat, Ltd. just issued a dividend of $2.40 per share on its common stock. The company’s dividends have been growing at a rate of 5%. If the stock currently sells for $80.00, what is your best estimate of the company’s cost of equity? (Show your work.)
(TCO 4) Given the following information, calculate the weighted average cost for the Ban Corp.
Percent of capital structure:
Preferred stock 10%
Common equity 70% Debt 20%
Additional information:
Corporate tax rate 34%
Dividend, preferred Dividend, expected common Price, preferred
Growth rate
Bond yield
Price, common
$8.00 $4.00
$80.00
5% 7%
$80.00
(TCO 6) What is the relationship between risk and return? What are some mathematical ways to measure risk?
What are some of the advantages and disadvantages of the Internal Rate of Return methodology?
