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Ryerson University or college CFIN300 Midterm Exam Show up 2007 You will discover 2 . 0 hours in this exam. Type A Student Name____________________________ (Please Print) Student Number_________________________________ Notes: 1 )

This is a closed publication exam. You could only have writing instruments, pencils and a calculator at your workplace. 2 . A formula piece is mounted on the end in the exam. You might detach the formula sheet from the test. Please fill out the scanner sheet as you go along in the exam. You will not be given additional time at the end of the exam to fill it. 3.

Select the best possible response for each qmc (question multiple choice ) question 4. Each of the 35 MC concerns is worth 1 mark Represents: Available Total 30_________ There are 14 web pages in this test. |2. |Poor Dog, Incorporation. borrowed $135, 000 in the bank today. They must pay off this funds over the next six years by making monthly | | |payments of $2, 215. 10. Precisely what is the interest price for the loan? Exhibit your answer with annual compounding. | |A) |5. 98% | |B) |6. 63% | |C) |4. 1% | |D) |5. 65% | |E) |5. 80% | |3. |How much might you pay for securities that pays off you $250 every 4 months for 10 years should you require a return of 8% per | | |year compounded monthly? | |A) |$11, 228. 48 | |B) |$15, 000. 00 | |C) |$10, 260. 0 | |D) |$13, 724. 80 | |E) |$10, 2 hundred. 23 | |4. |You can make 5% per year compounded every year for the next 5 years, and then 8% per year compounded quarterly for a few years. | | |What is the common annual exponentially boosted rate of return within the 9 12 months period? Exhibit your response with month to month compounding. | |A) | | |B) |6. 2% | |C) |6. 97% | |D) |6. 43% | |E) |6. 59% | |5. |You have purchased a house for $540, 000 using a $200, 1000 down payment. You will get a mortgage loan at the TF bank intended for | | |the stability. TF is charging a rate of five. 8% annually compounded semi-annually on your five year term mortgages.

You would like to make weekly| | |payments amortized over 20 years. What is the weekly repayment? | |A) |$877. 60 | |B) |$549. 01 | |C) |$545. forty seven | |D) | | |E) |$871. 92 | |6. |Master Meter is usually planning on creating a new $20 million facility. The company plans to pay 20% of the cost in cash and | | |finance the balance.

Just how much will every single monthly bank loan payment become if they can borrow the required funds to get 30 years for 9% every | | |year exponentially boosted semi-annually? | |A) |$128, 740 | |B) |$158, 567 | |C) |$160, 925 | |D) |$141, 982 | |E) |$126, 853 | 7. |Gerry Industries has some 8% (per year compounded semi-annually) discount bonds out there that are offering at $989, pay | | |interest semi-annually, and mature in fifteen years. The company want to issue $1 million in new fifteen-year bonds. What | | |coupon rate needs to be applied to the newest bonds if perhaps Gerry Sectors wants to sell them for par? Exhibit your answer with | | |semi-annual compounding. | |A) |8. 00% | |B) |8. 3% | |C) |7. 87% | |D) |8. 13% | |E) |8. 26% | |8. |You have decided to save $30 a week for the next three years as an unexpected emergency fund. You can generate 3. your five % per year compounded | | |weekly. How much might you have to put in in one lump sum today to offer the same quantity in your personal savings at the end of three | | |years? |A) |$4, 441. 26 | |B) |$4, 382. 74 | |C) |$4, 288. 87 | |D) |$4, 305. 19 | |E) |$4, 414. 16 | |9. |A visa or mastercard company charge an interest rate of 1. 25% per month.

The apr is ____ and the effective | | |annual rate is _______. | |A) |15. 00%, 16. 08% | |B) |16. 08%, 15. 00% | |C) |15. 00%, 15. 00% | |D) |15. 00%, 14. 54% | |E) |14. 55%, 15. 00% | |10. The Friendly Bank really wants to earn an effective annual price of 9% on the auto loans. If perhaps interest can be compounded month to month, what APRIL | | |must that they charge? | |A) |8. 65% | |B) |9. 17% | |C) |8. 58% | |D) |9. 38% | |E) |8. 44% | Use the pursuing to answer query 11: |Rondolo, Inc. |2006 Income Statement | |Net Sales |$12, 800 | |Less: Cost of Goods Sold |10, 400 | |Less: Depreciation |680 | |Earnings Before Fascination and Taxes |1, 720 | |Less: Interest Paid out |280 | |Taxable Salary |$1, 440 | |Less: Taxes |500 | |Net Income |$940 | | Dividends |$423 | | Additions to retained earnings |$517 | |Rondolo, Inc. |2006 Balance Sheet | |Cash | |$520 | |Accounts payable | |$1, 810 | |Accounts rec | |1, 080 | |Long-term financial debt | |3, 600 | |Inventory | |3, 120 | |Common stock | |5, 1000 | |Total | |$4, 720 | |Retained revenue | |1, 790 | |Net fixed assets | |7, 480 | | | | | |Total assets | |$12, 200 | |Total liabilities , equity | |$12, two hundred | | | | | | | | | |11. |Rondolo, Incorporation. is currently operating at optimum capacity. Almost all costs, resources, and current liabilities fluctuate directly with sales. | | |The tax price and the gross payout rate will remain continuous.

How much further debt is essential if simply no new fairness is raised| | |and sales happen to be projected to increase by 5 percent? | |A) |-$122. 08 | |B) |$598. 75 | |C) |$416. 00 | |D) |-$562. 50 | |E) |$318. 01 | |12. |Your brother-in-law obtained $2, 500 from you four years ago and then disappeared. Yesterday he went back and expressed a desire | | |to pay off the loan, such as interest accrued.

Assuming that you possessed agreed to impose him 10% per year compounded | | |annually, and assuming that he wishes to create five the same annual obligations beginning in 12 months, how much would your | | |brother-in-law have to pay you annually to be able to pay off the debt? (Assume the loan continue to be accrue fascination at 10% | | |per yr. ) | |A) |$738. 63 | |B) |$798. 24 | |C) |$772. 45 | |D) |$697. 43 | |E) |$751. 46 | |13. |What information to you need to get the 3 12 months forward rate starting 2 years from right now? |A) |2 and a few year absolutely no coupon area rates | |B) |3-year zero discount spot charge | |C) |2 and 3 year zero promotion spot prices | |D) |5 year zero promotion spot rate | |E) |3 and 5 year zero discount spot costs | |14. |You have already been making obligations for the last more than 20 years and have finally paid off the mortgage.

The original mortgage loan was intended for | | |$345, 000 and the interest rate was five per cent per year exponentially boosted semi-annually for the whole 25 season period. Simply how much interest have got | | |you paid over the last your five years of the mortgage? | |A) | | |B) |$120, 392. 23 | |C) |$13, 931. 87 | |D) |$80, 743. 13 | |E) |$106, 460. thirty seven | |15. |Which in the following is definitely (are) sources of cash? | | | | | |I. | |an increase in accounts receivable | | | | | |II. | | |a decline in common share | | | | | |III. | | |an increase in long-term debts | | | | | |IV. | |a decrease in accounts payable | | | | |A) |I, II, and IV only | |B) |II and 4 only | |C) |I only | |D) |III only | |E) |I and 3 only | |16. Monetary planning allows firms to: | | | | | |I. | | |avoid long term losses. | | | | | |II. | | |develop contingency strategies. | | | | | |III. | | |ascertain predicted financing requires. | | | | | |IV. | | |explore and evaluate choices. | | | |A) |I, II, III, and IV | |B) |I and 4 only | |C) |III and 4 only | |D) |II and III only | |E) |II, III, and IV simply | Make use of the following to resolve question 17: |Current |$100 | |Assets | | |A) |$52. 00 | |B) |$22. 50 | |C) |$0. 00 | |D) |$4. 50 | |E) |$29. 50 | |18. |A new secureness will pay a preliminary cash flow of $100 in 1 year. Thereafter it will shell out cash runs every month for the rest of | | |time.

The amount flows can grow by 3% each year compounded month-to-month forever. In case you require a return of 6% per year compounded | | |monthly, simply how much would you end up being willing to pay just for this security? | |A) |$18, 932. 40 | |B) |$40, 1000. 00 | |C) |$37, 864. 59 | |D) |$33, 333. 33 | |E) |$20, 000. 00 | |19. |Which one of the following activities is the best sort of an agency trouble? |A) |Basing management bonus deals on the attainment of certain financial goals | |B) |Requiring stockholders approval coming from all management payment decisions | |C) |Paying management bonus deals based on the present market value of the firm’s inventory | |D) |Paying management bonuses depending on the number of store locations opened during the year | |E) |Accepting a project that enhances both equally management salaries and the their market value of the firm’s stock | |20. |The bonds of Frank’s Welded, Inc. pay an 8% annual promotion, have a 7. 98% (per 12 months compounded annually) yield to maturity and | | |have a face worth of $1, 000. The latest rate of inflation is 2 . 5% per year exponentially boosted annually.

Precisely what is the real charge of return| | |on these a genuine? | |A) |5. 40 percent | |B) |5. 48 percent | |C) |5. thirty-five percent | |D) |5. 37 percent | |E) |5. 32 percent | |21. |What is the long term value with the following money flows at the end of 12 months 3 in the event the interest rate is definitely 6% annually compounded | | |annually? The cash runs occur towards the end of each yr. | | | | |Year one particular | | |Year 2 | | |Year a few | | | | | |$5, 180 | | |$9, 600 | | |$2, 250 | | | | |A) |$19, 341. 02 | |B) |$15, 916. eight | |C) |$19, 608. 07 | |D) |$18, 246. 25 | |E) |$18, 109. 08 | |22. |The I. C. James Company. invested $10, 000 six years ago at five per cent per year simple interest. The I. M. Smart Co. invested $10,50, 000 six years | | |ago at 5% per year exponentially boosted annually. Which one of the next statements is true concerning these two investments? | | | | | |I. | | |The I. C.

James Co. has an accounts value of $13, four hundred. 96 today. | | | | | |II. | | |The My spouse and i. C. Wayne Co. will have an account value of $13, 400. 96 six years from now. | | | | | |III. | | |The I. M Intelligent Co. is going to earn $525 interest in the 2nd year. | | | | | |IV. | | |Both the I actually. C. David Co. and the I. M. Smart Co. will make $500 interest in the initially year. | | | |A) |II, III and IV only | |B) |II and IV just | |C) |I and III only | |D) |III and IV only | |E) |I, 3 and 4 only | |23. |The bonds of Microhard, Inc. carry a 10% twelve-monthly coupon, include a $1, 000 face value, and mature in four years. Bonds of equivalent| | |risk deliver 15% (per year exponentially boosted annually). Microhard is having cashflow problems and has asked its bondholders to accept | | |the following package: The company would like to associated with next 3 coupon payments at 50 percent the slated amount, and make the last | | |coupon repayment be $251.

If this plan is implemented, the market price in the bond will certainly (rise/fall) to ___________. (Continue to| | |assume a 15% required return. ) | |A) |$892. 51 | |B) |$865. forty-five | |C) |$829. 42 | |D) |$808. fifth 89 | |E) |$851. twenty-five | |24. Your old sister lodged $5, 000 today in 8% each year compounded each year for five years. You wish to have just all the | | |money at the conclusion of the subsequent five years as your sibling. However , you can only generate 6% each year compounded each year. How much | | |more money you have deposit today than the sister for anyone who is to have the same amount at the end of five years? | |A) |$367. thirty-two | |B) |$399. 05 | |C) |$489. 84 | |D) |$201. zero | |E) |$423. seventy eight | |25. |Net cash flow differs via operating income due to the handling of: | |A) |Interest expense and depreciation. | |B) |Depreciation and dividends. | |C) |Dividends and non-interest charge. | |D) |Dividends and interest expense. | |E) |Dividends, curiosity expense, and depreciation. | |26. |Shirley adds $1, 000 with her savings for the last day of each month. Shawn adds $1, 1000 to his savings for the first time of each | | |month.

They equally earn a great 8% per year compounded quarterly rate of return. What is the difference within their savings account | | |balances at the end of 35 years? | |A) |$13, 923. 34 | |B) |$15, 794. 64 | |C) |$16, 776. thirty four | |D) |$14, 996. 47 | |E) |$12, 846. 88 | Use the following to resolve questions 27-30: |KLM, Incorporation. |2006 Salary Statement | |Net revenue |$3, 685 | |Cost of goods sold |$3, one hundred and eighty | |Depreciation |$104 | |Earnings prior to interest and taxes |$401 | |Interest paid |$25 | |Taxable income |$376 | |Taxes |$128 | |Net profits |$248 | |Dividends paid |$60 | |Addition to retained revenue |$188 | | | |KLM Company | |Balance Sheets by December 31, 2005 and 2006 | | | | |2005 |2006 | |2005 |2006 | |Cash |$520 |$601 |Accounts payable |$621 |$704 | |Accounts rec. $235 |$219 |Notes payable |$333 |$272 | |Inventory |$964 |$799 |Current liabilities |$954 |$976 | |Current resources |$1, 719 |$1, 619 |Long-term personal debt |$350 |$60 | |Net fixed resources |$890 |$930 |Common stock |$800 |$820 | | | | |Retained profits |$505 |$693 | |Total assets |$2, 609 |$2, 549 |Total liabilities and Owner’s collateral |$2, 609 |$2, 549 | |27. |What is a net capital spending intended for 2006? | |A) |$208 | |B) |$144 | |C) |-$144 | |D) |$64 | |E) |-$64 | |28. |What is definitely the cash flow coming from assets for 2006? |A) |$1, 307 | |B) |$2, 259 | |C) |$355 | |D) |$2, 503 | |E) |$111 | |29. |What may be the operating earnings for 2006? | |A) |$480 | |B) |$169 | |C) |$425 | |D) |$272 | |E) |$377 | |30. |What is the change in net seed money for 06\? |A) |$122 | |B) |$643 | |C) |$765 | |D) |-$643 | |E) |-$122 | |31. |A number of years ago you purchased some area for hundred buck, 000. Today it is worth $225, 500. If the terrain has been growing is cost by | | |5% per year compounded annually, the length of time have you held the terrain? | |A) |14. 1 years | |B) |16. years | |C) |Can’t be established with the provided information | |D) |13. 8 years | |E) |12. 5 years | |FV = PV (1+tr) |[pic] | |FV = PV (1+r)t |[pic] | |[pic] |[pic] | |[pic] |[pic] |[pic] |[pic] | |[pic] |[pic] | |[pic] |[pic] | |[pic] |[pic] | |[pic] |[pic] | |[pic] |Total Dollar Come back (TDR) sama dengan Dividend Salary + Capital Gain (Loss) | | | | | |[pic] | |[pic] |[pic] | |[pic] |Variance of results [pic] | |[pic] |[pic] | |[pic] |[pic] | |[pic] |[pic] | |Arbitrage Pricing Theory |PV of CCA duty shield [pic] | |[pic] | | |Current Proportion |= |Current Assets | |Total Asset |= |Sales | | | |Current Liabilities | |Turnover | |Total Assets | | | | | | | | | |Quick Ratio |= |Current Property ” Products on hand | |ROA |= |Net Income | | |Current Liabilities | | | |Total Assets | | | | | | | | | |Inventory Turnover |= |COGS | |ROE |= |Net Cash flow | | | |Inventory | | | |Total Equity | | | | | | | | | |Cash Percentage |= |Cash | |P/E Ratio |= |Price/common talk about | | | |Current Liabilities | | | |EPS | | | | | | | | | |Receivables |= |Sales | |Dividend Payment |= |DPS | |Turnover | |Accounts Receivable | |Ratio | |EPS | | | | | | | | | |D/E Proportion |= |Total Debt | |Dividend Payment |= |Cash Dividends | | | |Total Value | |Ratio | |Net Income | | | | | | | | | |Total Personal debt Ratio |= |Total Financial debt | |Market to Publication | |Price / Prevalent share | | | |Total Possessions | |Ratio |= |Book value of equity | | | | | | | | | | | | | | | | | |Equity multiplier |= |Total Assets | |Profit |= |Net Profits | | | |Total Equity |Margin | |Sales | | | | | | | | | |Net Working |= |Net Working Capital | |Interval Measure |= |Current Possessions | |Capital-Total Asset | |Total Assets | | | |Average Daily Operating Costs | | | | | | | | | |Long Term Debt |= |Long Term Debt | |Cash Insurance coverage |= |EBIT + Devaluation | |Ratio | |Total Equity + LT Debt | |Ratio | |Interest | | | | | | | | | | | | | | | | |Days’ Revenue in |= |365 Days and nights | |Days’ Sales in |= |365 Days | |Receivables | |Receivables Turnover | |Inventory | |Inventory Turnover | | | | | | | | | |Internal Progress |= |ROA x L | |’Sustainable |= |ROE x Ur | |Rate | |1 ” ROA x R | |Growth Rate | |1 ” ROE times R | | | | | | | | | | | | | |’Sustainable |= |p(S/A)(1+D/E) x R | | | | | |Growth Rate | |1 ” p(S/A)(1+D/E) x L | | | | | | | | | |NWC |= |Sales | |Fixed Asset |= |Sales | |Turnover | |NWC | |Turnover | |Net Fixed Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |Times Interest |= |EBIT | |CF coming from Assets sama dengan | | | | | |Operating CF ” Cap Ex girlfriend or boyfriend ” Additions to NWC | | | | | | | | | | | |Operating VOIR = EBIT + Deprec ” Duty | | | | | |=Sales ” Costs ” Income taxes | | | | | |= (Sales ” Costs) by (1 ” Tc) & Deprec x Tc | | | | | | | | | | | |Cap Ex = End Gross FA ” Plead with Gross FA | | | | | |Cap Ex sama dengan End Net FA ” Beg Net FA + Deprec | | | | | | | | | | |Add to NWC = End NWC ” Beg NWC | | | | | | | | | | | |CF to Debtholders = Fascination ” Net New Financial debt | | | | | | | | | | | |CF to Shareholders = Divs ” Net New Collateral | | | | | | | | | | | |CF from Possessions = CF to Debtholders + VOIR to | | | | | |Shareholders | |Earned | |Interest Charges | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Answer Crucial |2. |E | |3. |E | |4. |E | |5. B | |6. |E | |7. |D | |8. |A | |9. |A | |10. |A | |11. |A | |12. |C | |13. |A | |14. C | |15. |D | |16. |E | |17. |E | |18. |C | |19. |D | |20. |C | |21. |D | |22. Deb | |23. |C | |24. |C | |25. |A | |26. |D | |27. |B | |28. |C | |29. |E | |30. |E | |31. |B |

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