BUSN 379 Midterm Exam Solution
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BUSN 379 Midterm Exam Solution
1. What is the goal of financial management for a sole proprietorship?
2. Working capital management includes which of the following?
3. Market value reflects which of the following…
4. Which of the following is true regarding income statements?
5. Telemarket Inc. 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 Telemarket’s taxable income?
6. Home Best Hardware had $315,000 in taxable income last year. Using the tax rates
provided in Table 2.3, what is the approximate average tax rate?
7. 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?
8. The income statement reflects:
9. Green Leaf Nursery has EBIT of $250,000, interest of $30,000, taxes of $50,000, and
depreciation of $80,000. What is the company’s operating cash flow?
10. 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?
11. Mr. Smith will receive $8,500 a year for the next 14 years from a contract. If the
interest rate on this investment is eight percent, what is the approximate current value of
these future payments?
12. KED Engineering acquired an additional business unit for $310,000. The seller agreed
to accept annual payments of $67,000 at an interest rate of 6.5 percent. How many years
will it take KED Engineering to pay for this purchase?