BUS 401 Week 1 Quiz.

This archive file of BUS 401 Week 1 Quiz consists of:
1. The income statement for Brit, Inc. Indicates that tax expense was $20,000. The balance sheet indicates that taxes payable for the same year increased by $ 5,000. What amount did Brit, Inc. actually pay in taxes during this year?
2. A financial manager is considering two projects, A and B. A is expected to add $ 2 million to profits this year while B is expected to add $ 1 million to profits this year. Which of the following statements is most correct?
3. Which of the following statements about depreciation is true?
4. The principle of risk-return tradeoff means that _____
5. The quick ratio of a firm would be increased by which of the following?
6. Common sized income statements ___________
7. The December 31, 2007 balance sheet shows net fixed assets of $100,000 and the December 31, 2008 balance sheet shows net fixed assets of $140,000. Depreciation expense for 2007 is $15,000 and depreciation expense for 2008 is $20,000. Based on the information, the cost of fixed assets purchased during 2008 is ________
8. Project A is expected to generate positive cash flow of $ 1 million in 10 years while Project B is expected to generate $ 500,000 in 5 years. Therefore, _______
9. Global.Com has cash of $75,000; short term notes payable of $100,000; accounts receivable of $275,000; accounts payable of $135,000; inventories of $350,000; and accrued expenses of $75,000. What is Global
1.

Question :

The financial goal of a for-profit business is:

Student Answer:

profit maximization.

owner wealth maximization.

cash flow maximization.

utility maximization.

Instructor Explanation:

The answer can be found in the introduction to Chapter 1.

Points Received:

1 of 1

Comments:

2.

Question :

Suppose two investments produce the same expected cash flows.  We would assign a higher value to the investment with:

Student Answer:

lower risk.

higher cash flow variability.

higher risk.

the highest possible cash flows under ideal conditions.

Instructor Explanation:

The answer can be found in Section 1.1: Valuation.

Points Received:

1 of 1

Comments:

3.

Question :

Opportunity costs can vary over time and:

Student Answer:

are almost always close to 10%.

represent the highest possible return you can earn on an investment.

are always based on the interest rate offered on bank savings accounts.

set a return that other investments must equal or exceed to be attractive.

Instructor Explanation:

The answer can be found in Section 1.1: Valuation.

Points Received:

1 of 1

Comments:

4.

Question :

Time is a factor when determining the value of a possible investment.  As investors, all else being equal, we value investments:

Student Answer:

more the longer we have to wait for the payoff.

less the longer we have to wait for the payoff.

with predefined wait times for payoff.

regardless of time because a dollar is always a dollar.

Instructor Explanation:

The answer can be found in Section 1.1: Valuation.

Points Received:

1 of 1

Comments:

5.

Question :

An investment, such as a bond, will have a higher expected return (or yield) if it:

Student Answer:

has a higher purchase price.

holds a higher rating, such as AAA or AA.

carries greater risk.

has been issued by a well-known company.

Instructor Explanation:

The answer can be found in Section 1.1:

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