TEST2

A stakeholder

is:

• Given to each stockholder when they first purchase their stock.

• A person or entity including a stockholder or creditor, who potentially has a claim on the cash flows of the firm.

• A proxy vote made at a shareholders' meeting.

• A founding stockholder of the firm.

The mixture of debt and equity used by the firm to finance its operations is called:

• Financial depreciation.

• Agency cost analysis.

• Capital structure.

• Working capital management.

The management of the firm's short-term assets and liabilities is called:

• Financial depreciation.

• Agency cost analysis.

• Capital budgeting.

• Working capital management.

What is the annual percentage rate on a loan with a stated rate of 2.25 percent per quarter?

• 9

• 9.15

• 8.4

• 9.6

The length of time a firm must wait to recoup the money it has invested in a project is called the:

• internal return period.

• payback period.

• valuation period.

• profitability period.

The internal rate of return is defined as the:

• discount rate which causes the net present value of a project to equal zero.

• rate of return a project will generate if the project in financed solely with internal funds.

• maximum rate of return a firm expects to earn on a project.

• discount rate that equates the net cash inflows of a project to zero.

A project has an initial cost of $27,400 and a market value of $32,600. What is the difference between these two values called?

• net present value

• internal return

• payback value

• discounted payback

The length of time a firm must wait to recoup, in present value terms, the money it has in invested in a project is referred to as the:

• discounted profitability period.

• net present value period.

• internal return period.

• discounted payback period

An investor purchasing a British consol is entitled to receive annual

payments from the British government forever. What is the price of a consol that pays $150 annually if the next payment occurs one year from today? The market

interest rate is 4.6 percent

• 3450,42

• 2960,65

• 3260,87

• 3550,84

An investment project provides cash inflows of $840 per year for eight years. What is the project payback period if the initial cost is $3,200?

• 4,4

• 3,81

• 3,2

• 4,82