Retained earnings at the end of 2009 were $ 700,000 , but retained earnings at the end of 2010 had declined to $ 320,000 .
• The company does not pay dividends .
• The company ’ s depreciation expense is its only non-cash expense ; it has no amortization charges .
• The company has no non-cash revenues .
• The company ’ s net cash flow ( NCF ) for 2010 was $ 150,000 .
On the basis of this information , which of the following statements is CORRECT ? ( Points : 10 ) ( a ) Prestopino had negative net income in 2010 . ( b ) Prestopino ’ s depreciation expense in 2010 was less than $ 150,000 .
( c ) Prestopino had positive net income in 2010 , but its income was less than its 2009 income . ( d ) Prestopino ’ s NCF in 2010 must be higher than its NCF in 2009 .
( e ) Prestopino ’ s cash on the balance sheet at the end of 2010 must be lower than the cash it had on the balance sheet at the end of 2009 .
( 3 ) TCO G ) Beranek Corp . has $ 410,000 of assets , and it uses no debt — it is financed only with common equity . The new CFO wants to employ enough debt to bring the debt / assets ratio to 40 %, using the proceeds from the borrowing to buy back common stock at its book value . How much must the firm borrow to achieve the target debt ratio ? ( Points : 10 )
$ 155,800 $ 164,000 $ 172,200 $ 180,810 $ 189,851
( 4 ) ( TCO B ) You deposit $ 1,000 today in a savings account that pays 3.5 % interest , compounded annually . How much will your account be worth at the end of 25 years ? ( Points : 10 )
$ 2,245.08 $ 2,363.24 $ 2,481.41 $ 2,605.48 $ 2,735.75
( 5 ). ( TCO B ) You sold a car and accepted a note with the following cash flow stream as your payment . What was the effective price you received for the car assuming an interest rate of 6.0 %? Years : 0 1 2 3 4