FIN 571

Connect
Problems
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FIN 571 Week 1 Connect Problems

1) A business owned by a single individual is called a:
corporation.
sole proprietorship.
general partnership.
limited partnership.
limited liability company.

2) The decisions made by financial managers should all be

ones which increase the:
size of the firm.
growth rate of the firm.

 marketability of the managers.

market value of the existing owners' equity.
firms current sales.

3) The primary goal of financial management is to:

maximize current dividends per share of the existing
stock.
maximize the current value per share of the existing stock.
avoid financial distress.
minimize operational costs and maximize firm eciency.
maintain steady growth in both sales and net earnings.=

4) Accounting concepts for a firm to create value it must:

have a greater cash inow from its stockholders than its
outow to them.
create more cash ow than it uses.
reduce its investment in fixed assets since fixed assets
require the use of cash.
avoid payments to the government so dividends can be
increased.
avoid the issuance of debt securities.

5) The primary goal of financial management is to:

maximize current dividends per share of the existing
stock.
maximize the current value per share of the existing stock.
avoid financial distress.
minimize operational costs and maximize firm eciency.
maintain steady growth in both sales and net earnings.

6) Which one of the following business types is best suited to

raising large amounts of capital?
sole proprietorship

limited liability company

corporation
general partnership
limited partnership

7) Accounting profits and cash ows are generally:

the same since they reect current laws and accounting
standards.
the same since accounting profits reect when cash ows
occur.
different because of GAAP rules regarding the recognition
of income.
different because cash inows must occur before revenue
recognition.
the same due to the requirements of GAAP.

8) Some time ago, Julie purchased eleven acres of land

costing $15,490. Today, that land is valued at $49,957.
How long has she owned this land if the price of the land
has been increasing at 5 percent per year?
24.00 years
23.51 years
24.13 years
23.67 years
23.72 years

9) What is the future value of $3,088 invested for 11 years at

6.00 percent compounded annually?
$5,510.23
$5,841.06
$5,861.95
$5,882.83
$1,563.45

10)
One year ago, you invested $3,440. Today it is worth
$3,700.50. What rate of interest did you earn?
7.18 percent
7.57 percent
7.52 percent
7.50 percent
7.04 percent
11)
First City Bank pays 7 percent simple interest on its
savings account balances, whereas Second City Bank pays
7 percent interest compounded annually.
If you made a $73,000 deposit in each bank, how much more
money would you earn from your Second City Bank account at
the end of 9 years? (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)

Difference in accounts $__________

12)
A.) Compute the future value of $1,000 compounded
annually for 20 years at 6 percent. (Do not round
intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.)
Future value

$__________

B.) Compute the future value of $1,000 compounded

annually for 15 years at 9 percent. (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Future value $__________

C.) Compute the future value of $1,000 compounded

annually for 25 years at 6 percent. (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Future value

$__________

13)
For each of the following, compute the present value
(Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.):
Present Value Years

Interest Rate

$__________ 12
$__________ 3

Future value

6%

$ 15,651

12

53,557

$__________ 28

13

888,073

$__________ 30

10

552,164

14)
Wilkinson Co. has identified an investment project
with the following cash ows:
Year

Cash Flow

$ 880

1,250

1,510

1,675

If the discount rate is 8 percent, what is the present value of

these cash ows? (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)

Present value

$ __________

If the discount rate is 20 percent, what is the present value of

these cash ows? (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)

Present value

$ __________

If the discount rate is 30 percent, what is the present value of

these cash ows? (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)

Present value

$ __________

15)
You own 300 shares of Western Feed Mills stock
valued at $36.72 per share. What is the dividend yield if
your annual dividend income is $322?
2.9 percent
4.5 percent
3.2 percent
11.4 percent
9.2 percent

16)
Suppose a stock had an initial price of $82 per share,
paid a dividend of $1.20 per share during the year, and
had an ending share price of $90.

Compute the percentage total return. (Do not round

intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)

Total return

__________%

17)
Youve observed the following returns on SkyNet Data
Corporations stock over the past five years: 10 percent,
10 percent, 17 percent, 22 percent, and 10 percent.
Suppose the average ination rate over this period was
1.5 percent, and the average T-bill rate over the period
was 3 percent.
A.)
What was the average real return on the stock? (Do
not round intermediate calculations and enter your answer
as a percent rounded to 2 decimal places, e.g., 32.16.)
Average real return

__________%

B.)
What was the average nominal risk premium on the
stock? (Do not round intermediate calculations and enter
your answer as a percent rounded to 1 decimal place, e.g.,
32.1.)
Average nominal risk premium

__________%

Read More Courses online Here .. FIN 571

Week 2 Connect Problems |FIN 571 Week 3
Connect Problems | FIN 571 Week 4 Connect
Problems | FIN 571 Week 5 Connect Problems

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