QRB 501 FINAL EXAM
1. one disadvantage of the corporate form of business ownership is the:
double taxation of profits
2. which one of the following statements is false?
An aging schedule includes only overdue accounts
3. A firm has a debt-equity ratio of .64, a pretax cost of debt of 8.5 percent, and a required
return on assets of 12.6 percent. What is the cost of equity if you ignore taxes?
15.22%
4. Which one of these statements is correct concerning the cash cycle?
The longer the cash cycle, the more likely a firm will need external financing.
5. You plan to invest $6,500 for three years at 4 percent simple interest. What will your
investment be worth at the end of the three years?
$7,311.62 (OG)
$7,280 (NEW)
6. Which one of the following statements about preferred stock is true?
Preferred stock usually has a stated liquidating value of $100 per share
7. A firm has a total debt ratio of .47. This means the firm has 47 cents in debt for every:
$1 in fixed assets (OG)
$.53 in total equity (NEW)
8. The costs of avoiding a bankruptcy filing by a financially distressed firm are classified as
______ costs.
Indirect bankruptcy
9. All else held constant, interest rate risk will increase when the time to maturity:
Increases or the coupon rate decreases.
10. What is the present value of $6,811 to be received in one year if the discount rate is 6.5
percent?
$7,253.72 (OG)
$6,395.31 (NEW)
11. All else equal, the contribution margin must increase as:
The variable cost per unit declines
12. The process of planning and managing a firm’s long-term assets is called:
1. one disadvantage of the corporate form of business ownership is the:
double taxation of profits
2. which one of the following statements is false?
An aging schedule includes only overdue accounts
3. A firm has a debt-equity ratio of .64, a pretax cost of debt of 8.5 percent, and a required
return on assets of 12.6 percent. What is the cost of equity if you ignore taxes?
15.22%
4. Which one of these statements is correct concerning the cash cycle?
The longer the cash cycle, the more likely a firm will need external financing.
5. You plan to invest $6,500 for three years at 4 percent simple interest. What will your
investment be worth at the end of the three years?
$7,311.62 (OG)
$7,280 (NEW)
6. Which one of the following statements about preferred stock is true?
Preferred stock usually has a stated liquidating value of $100 per share
7. A firm has a total debt ratio of .47. This means the firm has 47 cents in debt for every:
$1 in fixed assets (OG)
$.53 in total equity (NEW)
8. The costs of avoiding a bankruptcy filing by a financially distressed firm are classified as
______ costs.
Indirect bankruptcy
9. All else held constant, interest rate risk will increase when the time to maturity:
Increases or the coupon rate decreases.
10. What is the present value of $6,811 to be received in one year if the discount rate is 6.5
percent?
$7,253.72 (OG)
$6,395.31 (NEW)
11. All else equal, the contribution margin must increase as:
The variable cost per unit declines
12. The process of planning and managing a firm’s long-term assets is called:
