C214 WGU EXAM CRAM QUESTIONS WITH
CORRECT ANSWERS 2025-2026
Pt CORRECT ANSWER is the sold price
Pt-1 CORRECT ANSWER is the bought price
CFt CORRECT ANSWER is the cash flow (coupons for bonds; dividends for stocks).
Dollar Returns CORRECT ANSWER = Pt - Pt-1 + CFt
Cash Flow from Investing (CFI) CORRECT ANSWER = Change in Net PP&E + Depreciation
Expense
Net PP&E CORRECT ANSWER = Gross PP&E - Accumulated Depreciation
With the assumption of no asset disposals, CFI will be equal to CORRECT ANSWER
1) change in Gross PP&E or 2) Change in Net PP&E plus depreciation expense.
Dividends CORRECT ANSWER = (Old RE + Net Income) - New RE
Change in RE CORRECT ANSWER = NI -dividends
CFF CORRECT ANSWER = change in notes payable + change in long-term
debt - dividends (assuming no other relevant changes)
FCFF CORRECT ANSWER = EBIT (1-tax rate) + Depreciation - CAPEX - Increases in NWC
EBIT CORRECT ANSWER = Earnings before interest and taxes
,CAPEX CORRECT ANSWER = Capital expenditure on PP&E; frequently measured as CFI
, NWC CORRECT ANSWER = Net working capital (current assets - current liabilities) changes
FCFE CORRECT ANSWER = NI + Depreciation - CAPEX - Increases in NWC + Increases in Debt
TAT Total Asset Turnover = Sales / Total Assets: CORRECT ANSWER
Literally, this ratio measures how many dollars in sales the firm generates per dollar of assets.
TAT of three indicates that for CORRECT ANSWER every $1 of assets, the firm is generating
$3 in sales.
TIE The Times Interest Earned Ratio = EBIT / Interest Expense: CORRECT ANSWER
Operating expense/Interest Expense
r CORRECT ANSWER = Real Risk-Free Rate + Inflation + Risk Premium
r = (definition for TMV) CORRECT ANSWER
Nominal discount rate (note: nominal means inflation is included)
Real risk-free rate CORRECT ANSWER = The rate earned on riskless investments with 0%
inflation
Inflation CORRECT ANSWER = The annual decay in the purchasing power of money
Risk premium CORRECT ANSWER = Compensation for bearing the risk of a particular
investment
TVM is a relatively simple concept. Essentially, we bring together three variables: CORRECT
ANSWER
1) amount of the cash flows
2) the timing of the cash flows
CORRECT ANSWERS 2025-2026
Pt CORRECT ANSWER is the sold price
Pt-1 CORRECT ANSWER is the bought price
CFt CORRECT ANSWER is the cash flow (coupons for bonds; dividends for stocks).
Dollar Returns CORRECT ANSWER = Pt - Pt-1 + CFt
Cash Flow from Investing (CFI) CORRECT ANSWER = Change in Net PP&E + Depreciation
Expense
Net PP&E CORRECT ANSWER = Gross PP&E - Accumulated Depreciation
With the assumption of no asset disposals, CFI will be equal to CORRECT ANSWER
1) change in Gross PP&E or 2) Change in Net PP&E plus depreciation expense.
Dividends CORRECT ANSWER = (Old RE + Net Income) - New RE
Change in RE CORRECT ANSWER = NI -dividends
CFF CORRECT ANSWER = change in notes payable + change in long-term
debt - dividends (assuming no other relevant changes)
FCFF CORRECT ANSWER = EBIT (1-tax rate) + Depreciation - CAPEX - Increases in NWC
EBIT CORRECT ANSWER = Earnings before interest and taxes
,CAPEX CORRECT ANSWER = Capital expenditure on PP&E; frequently measured as CFI
, NWC CORRECT ANSWER = Net working capital (current assets - current liabilities) changes
FCFE CORRECT ANSWER = NI + Depreciation - CAPEX - Increases in NWC + Increases in Debt
TAT Total Asset Turnover = Sales / Total Assets: CORRECT ANSWER
Literally, this ratio measures how many dollars in sales the firm generates per dollar of assets.
TAT of three indicates that for CORRECT ANSWER every $1 of assets, the firm is generating
$3 in sales.
TIE The Times Interest Earned Ratio = EBIT / Interest Expense: CORRECT ANSWER
Operating expense/Interest Expense
r CORRECT ANSWER = Real Risk-Free Rate + Inflation + Risk Premium
r = (definition for TMV) CORRECT ANSWER
Nominal discount rate (note: nominal means inflation is included)
Real risk-free rate CORRECT ANSWER = The rate earned on riskless investments with 0%
inflation
Inflation CORRECT ANSWER = The annual decay in the purchasing power of money
Risk premium CORRECT ANSWER = Compensation for bearing the risk of a particular
investment
TVM is a relatively simple concept. Essentially, we bring together three variables: CORRECT
ANSWER
1) amount of the cash flows
2) the timing of the cash flows
