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