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FIN 515 Final Exam 1

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FIN 515 Final Exam 1

Page 1:

1. (TCO A) Which of the following does NOT always increase a company's market value? (Points : 5)

2. (TCO F) Which of the following statements is correct? (Points : 5)

3. (TCO D) Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years,

4. (TCO G) Singal Inc. is preparing its cash budget. It expects to have sales of $30,000 in January, $35,000 in February, and $35,000 in March. If 20% of sales are for cash, 40% are credit sales paid in the month after the sale,

Page 2

1. (TCO H) Zervos Inc. had the following data for 2008 (in millions). The new CFO believes

2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount,

3. (TCO E) You were hired as a consultant to the Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%,

4. (TCO B) A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3.

5. (TCO G) Based on the corporate valuation model, Hunsader's value of operations is $300 million. The balance sheet shows $20 million of short-term investments that are unrelated to operations,

6. TCO G) Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants you to forecast the firm's additional funds needed (AFN). The firm is operating at full capacity.

FIN 515 Final Exam 2

Page 1

1. (TCO A) Which of the following does NOT always increase a company's market value? (Points : 5)

2. (TCO F) Which of the following statements is correct? (Points : 5)

3. (TCO D) The Ramirez Company's last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return

4. (TCO G) The ABC Corporation's budgeted monthly sales are $4,000. In the first month, 40% of its customers pay and take the 3% discount. The remaining 60% pay in the month following the sale and don't receive a discount.

5. (TCO G) Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below.

Page 2

1. (TCO H) Your consulting firm was recently hired to improve the performance of Shin-Soenen Inc, which is highly profitable but has been experiencing cash shortages due to its high growth rate.

2. (TCO C) Bumpas Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net 50. If the firm chooses to pay on time but does not take the discount,

3 (TCO E) Daves Inc. recently hired you as a consultant to estimate the company's WACC. You have obtained the following information. 

4. (TCO B) A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3.

5. (TCO G) Based on the corporate valuation model, the value of a company's operations is $900 million. Its balance sheet shows

FIN 515 Final Exam 3

Page 1

1. (TCO A) Which of the following statements is NOT correct? (Points:5)

2. (TCO F) Which of the following statements is correct? (Points : 5)

3. (TCO D) The Ackert Company's last dividend was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever.

4. (TCO G) The ABC Corporation's budgeted monthly sales are $4,000. In the first month, 40% of its customers pay and take the 3% discount. The remaining 60% pay in the month following the sale and don't receive a discount.

5. (TCO G) Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants you to forecast the firm's additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below.

Page 2

1. (TCO H) The Dewey Corporation has the following data, in thousands. Assuming a 365-day year, what is the firm's cash conversion cycle?

3. (TCO E) Daves Inc. recently hired you as a consultant to estimate the company's WACC. You have obtained the following information.

4. (TCO B) Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2,

5. (TCO G) Based on the corporate valuation model, the value of a company's operations is $900 million. Its balance sheet shows $70 million in accounts receivable,

FIN 515 Final Exam 1 Page 1: 1. (TCO A) Which of the following does NOT always increase a company's market value? (Points : 5) 2. (TCO F) Which of the following statements is correct? (Points : 5) 3. (TCO D) Church Inc. is presently enjoying rel
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