FIN 571 Week 3 Individual Assignment WileyPlus Quiz

http://homework-elance.com/downloads/fin-571-week-3-individual-assignment-wileyplus-quiz/
Or Visit Our Website
Visit : http://homework-elance.com/
Email Us : homeworkelance@gmail.com

FIN 571 Wileyplus Week 3 Practice Quiz

The operating cycle

ends not with the finished goods being sold to customers and the cash collected on the sales; but
when you take into account the time taken by the firm to pay for its purchases.

begins when the firm uses its cash to purchase raw materials and ends when the firm collects
cash payments on its credit sales.

To measure operating cycle we need another measure called the days payables outstanding.

begins when the firm receives the raw materials it purchased that would be used to produce the
goods that the firm manufactures.
You are provided the following working capital information for the Ridge Company:
Ridge Company
Account

Inventory
Accounts receivable
Accounts payable

$12,890
12,800
12,670

Net sales
Cost of goods sold

$124,589
99,630

Operating cycle: What is the operating cycle for Ridge Company?

36 days

51 days

47 days

85 days
Ticktock Clocks sells 10,000 alarm clocks each year. If the total cost of placing an order is $65
and it costs $85 per year to carry the alarm clock in inventory, use the EOQ formula to calculate
the optimal order size.

26,154 clocks

161 clocks

124 clocks

15,294 clocks
The asset substitution problem occurs when

managers substitute riskier assets for less risky ones to the detriment of equity holders.

managers substitute riskier assets for less risky ones to the detriment of bondholders.

managers substitute less risky assets for riskier ones to the detriment of equity holders.

managers substitute less risky assets for riskier ones to the detriment of bondholders.
M&M Proposition 1: Dynamo Corp. produces annual cash flows of $150 and is expected to
exist forever. The company is currently financed with 75 percent equity and 25 percent debt.
Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7
percent for the debt. You currently own 10 percent of the stock.
How much are your cash flows today?

$12.38

$150

$15

$4.50
M&M Proposition 2: Melbas Toast has a capital structure with 30% debt and 70% equity. Its
pretax cost of debt is 6%, and its cost of equity is 10%. The firms marginal corporate income tax
rate is 35%. What is the appropriate WACC?

7.44%

8.80%

8.17%

6.35%
According to the text, the financial plan covers a period of

none of these.

three to five years.

one year.

ten years.
The financing plan of a firm will indicate

the dollar amount of funds that has to be raised externally and the sources of funds available to
the firm, the desired capital structure for the firm, and the firms dividend policy.

the firms dividend policy, the desired capital structure for the firm, and the firms working
capital policy.

the dollar amount of funds that has to be raised externally and the sources of funds available to

the firm, the desired capital structure for the firm, and the firms working capital policy.

the dollar amount of funds that has to be raised externally and the sources of funds available to
the firm, the firms dividend policy, and the firms working capital policy.
Payout and retention ratio: Tradewinds Corp. has revenues of $9,651,220, costs of $6,080,412,
interest payment of $511,233, and a tax rate of 34 percent. It paid dividends of $1,384,125 to
shareholders. Find the firms dividend payout ratio and retention ratio.

25%, 75%

34%, 66%

66%, 34%

69%, 31%