WGU D076 OBJECTIVE ASSESSMENT FINAL
EXAM 2 LATEST VERSIONS (VERSION A AND B)
2026-20257ACTUAL EXAM /Newest 2026/2027
Complete 400 Questions And Correct Detailed
Answers (Verified Answers) |Already Graded
A+||Brand New Version!!
0/1
Maria and Mateo are setting financial goals. They decide that they need to save $200 each month
to reach their goal of taking their children to visit their grandparents in Spain next summer. What
is the objective of setting such a goal? - CORRECT ANSWER: To maximize individual utility -
While everyone has different personal financial goals, the objectives of such goals is to
maximize individual utility.
0/1
You are analyzing fixed assets to create pro forma financial statements for your company. You
realize that, since sales will increase next year, you will also need your manufacturing capacity to
increase by the same amount. Currently, you are operating at maximum capacity. You buy an
entire new factory and multiple pieces of equipment that increase capacity to much more than
you need to meet the sales growth. Which concept describes why such a large purchase was
necessary? - CORRECT ANSWER: Fixed assets are lumpy. - You cannot purchase only part of a
factory and equipment to meet the sales growth. Instead, you must purchase the entire factory
along with all the equipment to meet the sales growth. We call the increase of fixed assets as the
firm approaches its full capacity "lumpy assets" because it requires a lump sum purchase.
1/1
Omar is about to purchase a new car for $30,000. He knows he wants to buy the car, but he is
still trying to decide how to pay for it. He has barely over $30,000 in his bank account. He can
either take out an auto loan from a bank or use a mix of cash and an auto loan. - CORRECT
ANSWER: Financing a goal - He has already made a decision to purchase the car and is now
deciding on financing options.
,1/1
The company Betsy's Wigs is considering three potential projects that are not mutually exclusive.
The IRR, NPV, and PI for each project are listed in the table below. Use this information to rank
the projects in the order in which Betsy's Wigs should accept them to bring the most value to the
firm.
Project Project 1 Project 2 Project 3
IRR 23% 18% 21%
NPV $820 $880 $790
PI 1.02 1.27 1.35 - CORRECT ANSWER: Project 3, Project 2, Project 1 - The projects with the
highest PIs should be accepted first.
1/1
Which type of financial institution is a mutual fund? - CORRECT ANSWER: Investment
institution - Investment institutions provide individuals and firms access to financial markets.
A company currently has a ratio of 1.5 but hopes to improve the ratio to 2 to align more with the
industry benchmark. To achieve this goal, costs were cut in production through an investment in
efficient equipment, and the company achieved a higher profit margin. If this continues, you are
certain that the firm will achieve its goal in two years. What is this an example of? - CORRECT
ANSWER: Progress measurement - You are comparing the company's ratio to the goal and
checking how the company is progressing toward the goal.
A company is considering five projects that are not mutually exclusive. However, the company
does not have enough money to do all of them. In order to prioritize projects that fit within the
company's budget, which capital budgeting method should be used? - CORRECT ANSWER:
Profitability index (PI)
A company is trying to decide which of four projects to invest in.
,Project 1 has an IRR of 14% and an NPV of $54,000.
Project 2 has an IRR of 11% and an NPV of $67,000.
Project 3 has an IRR of 9% and an NPV of $60,000.
Project 4 has an IRR of 13% and an NPV of $47,000.
If the company can do only one project, which project should it choose to add the greatest value
to the firm? - CORRECT ANSWER: Project 2 -The project with the highest NPV will bring the
most value to the company.
A company is trying to finance a project with a mortgage loan from a bank. The company's
assessment of the project indicates that the company may experience several years of loss until
the project becomes profitable. This means that the company might lose its ability to pay back
the loan and the interest on the mortgage. What action might the bank take to protect its interest?
- CORRECT ANSWER: Set a strict covenant that the company cannot easily achieve. - By
setting a strict covenant, there is a risk that the company may not meet its obligation, which
would deter the company from taking on risky projects.
A company that produces soap, shampoo, lotion, and other personal care products has recently
taken a hit due to a competitor's new product line. The company decides to reduce wages for its
labor force to save money while the company focuses on building up its reputation again, but the
company's labor force goes on strike to protest the pay cuts. What type of risk does the strike
represent? - CORRECT ANSWER: Idiosyncratic risk - Idiosyncratic risk is the same as firm-
specific risk. Since the strike will most likely affect only this firm, it is a firm-specific risk.
A company's officers and board of directors are selling their stocks in the firm at higher prices
due to false accounting reports that made the stock seem more valuable than it truly was. Which
ethical issue is occurring in this situation? - CORRECT ANSWER: Agency problem due to
conflicting interests - Accounting manipulation by management in pursuit of higher stock-related
compensation is an example of an agency problem.
A financial analyst for the company Bobby's Books has been asked to evaluate a potential
investment using a method that considers the time value of money. Is there more than one way to
do this? - CORRECT ANSWER: Yes, the analyst could use both the NPV and the IRR. - Both
NPV and IRR take into account the time value of money.
, A potential project to expand the size of an apartment complex will cost $100,000. Its calculated
net present value is $5,000. Given this information, which statement is correct? - CORRECT
ANSWER: The project should be accepted because it has a positive NPV. -
Beckingham Sports is an American sporting goods company. Based on a $400,000 market study
and a $600,000 fee for consulting spent prior to the project, the firm can increase its annual
operating cash flow by $3,000,000 by selling overseas. Because the firm was considering the
expansion, it spent $2,000,000 to purchase a land for new factory and equipment. However,
someone is making an offer to pay the company $3,000,000 for the land it purchased for the new
factory. What is relevant to include in the company's capital budgeting decision? - CORRECT
ANSWER: 3,000,000 for the offer price of the land - If you do the project, you will miss the
opportunity to sell the land for $3,000,000. This is an example of an opportunity cost.
Company ABC would like to continue to grow, but in order to maintain control of all decisions
and ownership, it wants to avoid issuing new stock. Which calculation will show the company's
leadership the fastest that ABC can grow? - CORRECT ANSWER: Sustainable growth rate -
Sustainable growth rate is defined as the rate at which a firm can grow without issuing new
equity. It implies that the firm's growth comes from the return on equity less any dividends.
Firm A has an average collection period of 67 days, and the industry norm is 40 days. What can
the firm do in order to be competitive with accounts receivable management in the industry? -
CORRECT ANSWER: Tighten the credit standards for its customers. - The credit standards are
too loose, so the customers are not paying Firm A as quickly as they are paying other competitors
in the industry. Tightening the credit standards would shorten the average collection period.
For what purpose are market ratios used? - CORRECT ANSWER: To evaluate the current share
price of a public firm's stock - Market ratios are used to evaluate whether the current share of a
public firm's stock is correctly priced.
Hannah is the financial manager of a firm. A project that she has recommended has been
approved and will cost $5 million. Since the company does not have enough cash on reserve,
Hannah must figure out how to raise enough money to start the project. She can choose whether
to issue new bonds, new stocks, a mortgage loan, or some combination of those options. What
task is Hannah performing in this scenario? - CORRECT ANSWER: Making a financing
EXAM 2 LATEST VERSIONS (VERSION A AND B)
2026-20257ACTUAL EXAM /Newest 2026/2027
Complete 400 Questions And Correct Detailed
Answers (Verified Answers) |Already Graded
A+||Brand New Version!!
0/1
Maria and Mateo are setting financial goals. They decide that they need to save $200 each month
to reach their goal of taking their children to visit their grandparents in Spain next summer. What
is the objective of setting such a goal? - CORRECT ANSWER: To maximize individual utility -
While everyone has different personal financial goals, the objectives of such goals is to
maximize individual utility.
0/1
You are analyzing fixed assets to create pro forma financial statements for your company. You
realize that, since sales will increase next year, you will also need your manufacturing capacity to
increase by the same amount. Currently, you are operating at maximum capacity. You buy an
entire new factory and multiple pieces of equipment that increase capacity to much more than
you need to meet the sales growth. Which concept describes why such a large purchase was
necessary? - CORRECT ANSWER: Fixed assets are lumpy. - You cannot purchase only part of a
factory and equipment to meet the sales growth. Instead, you must purchase the entire factory
along with all the equipment to meet the sales growth. We call the increase of fixed assets as the
firm approaches its full capacity "lumpy assets" because it requires a lump sum purchase.
1/1
Omar is about to purchase a new car for $30,000. He knows he wants to buy the car, but he is
still trying to decide how to pay for it. He has barely over $30,000 in his bank account. He can
either take out an auto loan from a bank or use a mix of cash and an auto loan. - CORRECT
ANSWER: Financing a goal - He has already made a decision to purchase the car and is now
deciding on financing options.
,1/1
The company Betsy's Wigs is considering three potential projects that are not mutually exclusive.
The IRR, NPV, and PI for each project are listed in the table below. Use this information to rank
the projects in the order in which Betsy's Wigs should accept them to bring the most value to the
firm.
Project Project 1 Project 2 Project 3
IRR 23% 18% 21%
NPV $820 $880 $790
PI 1.02 1.27 1.35 - CORRECT ANSWER: Project 3, Project 2, Project 1 - The projects with the
highest PIs should be accepted first.
1/1
Which type of financial institution is a mutual fund? - CORRECT ANSWER: Investment
institution - Investment institutions provide individuals and firms access to financial markets.
A company currently has a ratio of 1.5 but hopes to improve the ratio to 2 to align more with the
industry benchmark. To achieve this goal, costs were cut in production through an investment in
efficient equipment, and the company achieved a higher profit margin. If this continues, you are
certain that the firm will achieve its goal in two years. What is this an example of? - CORRECT
ANSWER: Progress measurement - You are comparing the company's ratio to the goal and
checking how the company is progressing toward the goal.
A company is considering five projects that are not mutually exclusive. However, the company
does not have enough money to do all of them. In order to prioritize projects that fit within the
company's budget, which capital budgeting method should be used? - CORRECT ANSWER:
Profitability index (PI)
A company is trying to decide which of four projects to invest in.
,Project 1 has an IRR of 14% and an NPV of $54,000.
Project 2 has an IRR of 11% and an NPV of $67,000.
Project 3 has an IRR of 9% and an NPV of $60,000.
Project 4 has an IRR of 13% and an NPV of $47,000.
If the company can do only one project, which project should it choose to add the greatest value
to the firm? - CORRECT ANSWER: Project 2 -The project with the highest NPV will bring the
most value to the company.
A company is trying to finance a project with a mortgage loan from a bank. The company's
assessment of the project indicates that the company may experience several years of loss until
the project becomes profitable. This means that the company might lose its ability to pay back
the loan and the interest on the mortgage. What action might the bank take to protect its interest?
- CORRECT ANSWER: Set a strict covenant that the company cannot easily achieve. - By
setting a strict covenant, there is a risk that the company may not meet its obligation, which
would deter the company from taking on risky projects.
A company that produces soap, shampoo, lotion, and other personal care products has recently
taken a hit due to a competitor's new product line. The company decides to reduce wages for its
labor force to save money while the company focuses on building up its reputation again, but the
company's labor force goes on strike to protest the pay cuts. What type of risk does the strike
represent? - CORRECT ANSWER: Idiosyncratic risk - Idiosyncratic risk is the same as firm-
specific risk. Since the strike will most likely affect only this firm, it is a firm-specific risk.
A company's officers and board of directors are selling their stocks in the firm at higher prices
due to false accounting reports that made the stock seem more valuable than it truly was. Which
ethical issue is occurring in this situation? - CORRECT ANSWER: Agency problem due to
conflicting interests - Accounting manipulation by management in pursuit of higher stock-related
compensation is an example of an agency problem.
A financial analyst for the company Bobby's Books has been asked to evaluate a potential
investment using a method that considers the time value of money. Is there more than one way to
do this? - CORRECT ANSWER: Yes, the analyst could use both the NPV and the IRR. - Both
NPV and IRR take into account the time value of money.
, A potential project to expand the size of an apartment complex will cost $100,000. Its calculated
net present value is $5,000. Given this information, which statement is correct? - CORRECT
ANSWER: The project should be accepted because it has a positive NPV. -
Beckingham Sports is an American sporting goods company. Based on a $400,000 market study
and a $600,000 fee for consulting spent prior to the project, the firm can increase its annual
operating cash flow by $3,000,000 by selling overseas. Because the firm was considering the
expansion, it spent $2,000,000 to purchase a land for new factory and equipment. However,
someone is making an offer to pay the company $3,000,000 for the land it purchased for the new
factory. What is relevant to include in the company's capital budgeting decision? - CORRECT
ANSWER: 3,000,000 for the offer price of the land - If you do the project, you will miss the
opportunity to sell the land for $3,000,000. This is an example of an opportunity cost.
Company ABC would like to continue to grow, but in order to maintain control of all decisions
and ownership, it wants to avoid issuing new stock. Which calculation will show the company's
leadership the fastest that ABC can grow? - CORRECT ANSWER: Sustainable growth rate -
Sustainable growth rate is defined as the rate at which a firm can grow without issuing new
equity. It implies that the firm's growth comes from the return on equity less any dividends.
Firm A has an average collection period of 67 days, and the industry norm is 40 days. What can
the firm do in order to be competitive with accounts receivable management in the industry? -
CORRECT ANSWER: Tighten the credit standards for its customers. - The credit standards are
too loose, so the customers are not paying Firm A as quickly as they are paying other competitors
in the industry. Tightening the credit standards would shorten the average collection period.
For what purpose are market ratios used? - CORRECT ANSWER: To evaluate the current share
price of a public firm's stock - Market ratios are used to evaluate whether the current share of a
public firm's stock is correctly priced.
Hannah is the financial manager of a firm. A project that she has recommended has been
approved and will cost $5 million. Since the company does not have enough cash on reserve,
Hannah must figure out how to raise enough money to start the project. She can choose whether
to issue new bonds, new stocks, a mortgage loan, or some combination of those options. What
task is Hannah performing in this scenario? - CORRECT ANSWER: Making a financing
