Question

Question 27

If a firm produces a 4 percent return on assets and also a 12 percent return on equity, then the firm:

Select one:

a. is using its assets as efficiently as possible.

b. also has a current ratio of 10.

c. has no debt of any kind.

d. has an equity multiplier of 3.

e. has an equity multiplier of 2.

Question 28

The total long-term debt and equity of the firm is frequently called:

Select one:

a. Total capitalization.

b. Debt-equity reconciliation.

c. Total financing.

d. Debt-equity consolidation.

e. Total assets.

Question 29

You are considering a project that costs $3000 and has expected cash flows of $1100, $1210, and $1331.00 over the next three years. If the appropriate discount rate for the project's cash flows is 10%, what is the net present value of this project?

Select one:

a. $0.00

b. $0.71

c. $19.79

d. The NPV is negative

e. $64.10

Question 30

A firm earns net income of $250,000 in a given year and the firm's retained earnings increase $200,000 for that same year. The retention ratio is:

Select one:

a. 40%

b. 60%

c. 100%

d. 25%

e. 80%

Answer 1

Answer 27) d. has an equity in multiplier of 3. Since the firm is earning 4% on asset and 12% on equity hence the equity is 3 times (12/4).

option a and option b and option c will be invalid as because there is not enough data to state such condition.

Option e will also be invalid as beacuse its 3time not 2 time.

Answer 28) a. Total capitalization. A debt and equity combinatrion in general known as total cap which is the foundation of the organization.

Option b and option d is invalid - frankly i never heard this term

Option C- Total financing includes the Outside finace but does not include the equity as equity is not finaced it is the earning of owner.

option e will be invalid as Debt and equtiy is a part of liabilities side not asset side.

Answer 29) Option A for detail refer image below:-

Answer 30 - Retention ratio =(retained earning/Total income)*100 i.e (200000/250000)*100 i.e 80% Hence the answer will be e. 80%.