9. Refer to the figure above. What is the taxable income for 2008? 

A. $360   B. $520   C. $640   D. $780   E. $800

10. Refer to the figure above. What is the operating cash flow for 2008? 

A. $520   B. $800   C. $1,015   D. $1,110   E. $1,390

11. Refer to the figure above. What are the sales for 2008? 

A. $4,225   B. $4,385   C. $4,600   D. $4,815   E. $5,000

12. Samuelson's has a debt-equity ratio of 40 percent, sales of $8,000, net income of $600, and total debt of $2,400. What is the return on equity? 

A. 6.25 percent   B. 7.50 percent   C. 9.75 percent   D. 10.00 percent   E. 11.25 percent

13. A firm has a return on equity of 15 percent. The debt-equity ratio is 50 percent. The total asset turnover is 1.25 and the profit margin is 8 percent. The total equity is $3,200. What is the amount of the net income? 

A. $480   B. $500   C. $540   D. $600   E. $620

14. Which one of the following statements concerning interest rates is correct? 

A. The stated rate is the same as the effective annual rate.

B. An effective annual rate is the rate that applies if interest were charged annually.

C. The annual percentage rate increases as the number of compounding periods per year increases.

D. Banks prefer more frequent compounding on their savings accounts.

E. For any positive rate of interest, the effective annual rate will always exceed the annual percentage rate.

15. Which of the following statements concerning the effective annual rate are correct? 

I. When making financial decisions, you should compare effective annual rates rather than annual percentage rates.

II. The more frequently interest is compounded, the higher the effective annual rate.

III. A quoted rate of 6% compounded continuously has a higher effective annual rate than if the rate were compounded daily.

IV. When borrowing and choosing which loan to accept, you should select the offer with the highest effective annual rate. 

A. I and II only        B. I and IV only      C. I, II, and III only

D. II, III, and IV only   E. I, II, III,and IV

16. Your parents are giving you $100 a month for four years while you are in college. At a 6% discount rate, what are these payments worth to you when you first start college? 

A. $3,797.40   B. $4,167.09   C. $4,198.79   D. $4,258.03   E. $4,279.32

17. You just won the lottery! As your prize you will receive $1,200 a month for 100 months. If you can earn 8% on your money, what is this prize worth to you today? 

A. $87,003.69   B. $87,380.23   C. $87,962.77   D. $88,104.26   E. $90,723.76

18 A bond with a face value of $1,000 that sells for $1,000 in the market is called a _____ bond. 

A. par value   B. discount   C. premium   D. zero coupon   E. floating rate

19 A bond with a face value of $1,000 that sells for less than $1,000 in the market is called a _____ bond. 

A. par valu  B. discount   C. premium   D. zero coupon   E. floating rate

20 A bond with a face value of $1,000 that sells for more than $1,000 in the market is called a _____ bond. 

A. par value   B. discount   C. premium   D. zero coupon   E. floating rate

21. Payments made by a corporation to its shareholders, in the form of either cash, stock or payments in kind, are called: 

A. retained earnings.   B. net income.   C. dividends.   D. redistributions.   E. infused equity.

22. The market in which new securities are originally sold to investors is called the _____ market. 

A. dealer   B. auction   C. over-the-counter   D. secondary   E. primary

23. The market in which previously issued securities are traded among investors is called the _____ market. 

A. dealer   B. auction   C. over-the-counter   D. secondary   E. primary

24. In the present-value break-even the EAC is used to: 

A. determine the opportunity cost of investment.

B. allocate depreciation over the life of the project.

C. allocate the initial investment at the opportunity cost over the life of the project.

D. determine the contribution margin to fixed costs.

E. None of these.

25. The present value break-even point is superior to the accounting break-even point because: 

A. present value break-even is more complicated to calculate.

B. present value break-even covers the economic opportunity costs of the investment.

C. present value break-even is the same as sensitivity analysis.

D. present value break-even covers the fixed costs of production, while the accounting break-even does not.

E. present value break-even covers the variable costs of production, while the accounting break-even does not.