Page 1 of 94
FINC 381 – UTK Roark – Exam 1 ACTUAL EXAM
COMPLETE QUESTIONS AND CORRECT
ANSWERS LATEST UPDATE THIS YEAR
FINC 381 – UTK Roark – Exam 1 Practice Questions
Exam Coverage:
Topics include fundamentals of corporate finance, time value of money, financial statements
and ratio analysis, risk and return, interest rates, discounting and compounding, loan
amortization, and valuation basics.
Practice MCQs with Rationales (1–50)
1.
Which of the following is the primary goal of financial management?
A. Maximize sales
B. Maximize profits
C. Maximize shareholder wealth
D. Minimize costs
Answer: C
Rationale: The main objective is to maximize the value of the firm for shareholders.
, Page 2 of 94
2.
The balance sheet equation is:
A. Assets = Liabilities + Equity
B. Assets = Equity – Liabilities
C. Liabilities = Assets + Equity
D. Equity = Assets + Liabilities
Answer: A
Rationale: This fundamental accounting equation must always balance.
3.
Which financial statement shows a firm’s profitability over a period?
A. Balance sheet
B. Statement of cash flows
C. Income statement
D. Statement of retained earnings
Answer: C
Rationale: The Income Statement shows revenues and expenses over time to calculate profit.
, Page 3 of 94
4.
Net working capital is defined as:
A. Current assets – current liabilities
B. Total assets – long-term debt
C. Operating income – taxes
D. Market value of assets
Answer: A
Rationale: NWC is a measure of short-term liquidity.
5.
Depreciation expense on the income statement:
A. Affects cash flow
B. Is a non-cash expense
C. Increases taxes
D. Is irrelevant to valuation
Answer: B
Rationale: Depreciation reduces taxable income but does not affect cash directly.
, Page 4 of 94
6.
The present value of $500 to be received in 3 years at 8% is:
A. $400
B. $399
C. $375
D. $427
Answer: B
Rationale: PV = 500 / (1.08)^3 ≈ $399.
7.
If interest is compounded annually, $1,000 invested at 10% for 2 years will be worth:
A. $1,100
B. $1,210
C. $1,225
D. $1,331
Answer: B
Rationale: FV = 1000 × (1.10)^2 = $1,210.
FINC 381 – UTK Roark – Exam 1 ACTUAL EXAM
COMPLETE QUESTIONS AND CORRECT
ANSWERS LATEST UPDATE THIS YEAR
FINC 381 – UTK Roark – Exam 1 Practice Questions
Exam Coverage:
Topics include fundamentals of corporate finance, time value of money, financial statements
and ratio analysis, risk and return, interest rates, discounting and compounding, loan
amortization, and valuation basics.
Practice MCQs with Rationales (1–50)
1.
Which of the following is the primary goal of financial management?
A. Maximize sales
B. Maximize profits
C. Maximize shareholder wealth
D. Minimize costs
Answer: C
Rationale: The main objective is to maximize the value of the firm for shareholders.
, Page 2 of 94
2.
The balance sheet equation is:
A. Assets = Liabilities + Equity
B. Assets = Equity – Liabilities
C. Liabilities = Assets + Equity
D. Equity = Assets + Liabilities
Answer: A
Rationale: This fundamental accounting equation must always balance.
3.
Which financial statement shows a firm’s profitability over a period?
A. Balance sheet
B. Statement of cash flows
C. Income statement
D. Statement of retained earnings
Answer: C
Rationale: The Income Statement shows revenues and expenses over time to calculate profit.
, Page 3 of 94
4.
Net working capital is defined as:
A. Current assets – current liabilities
B. Total assets – long-term debt
C. Operating income – taxes
D. Market value of assets
Answer: A
Rationale: NWC is a measure of short-term liquidity.
5.
Depreciation expense on the income statement:
A. Affects cash flow
B. Is a non-cash expense
C. Increases taxes
D. Is irrelevant to valuation
Answer: B
Rationale: Depreciation reduces taxable income but does not affect cash directly.
, Page 4 of 94
6.
The present value of $500 to be received in 3 years at 8% is:
A. $400
B. $399
C. $375
D. $427
Answer: B
Rationale: PV = 500 / (1.08)^3 ≈ $399.
7.
If interest is compounded annually, $1,000 invested at 10% for 2 years will be worth:
A. $1,100
B. $1,210
C. $1,225
D. $1,331
Answer: B
Rationale: FV = 1000 × (1.10)^2 = $1,210.
