Finance Essay

965 WordsAug 15, 20134 Pages
1. (TCO 1) What is the goal of financial management for a sole proprietorship? (Points : 3) decrease long-term debt to reduce the risk to the owner maximize net income given the resources of the firm maximize the market value of the equity minimize the tax impact on the proprietor minimize costs and increase production 2. (TCO 1) Which of the these activities is not a capital budgeting task? (Points : 3) determining the amount of cash needed on a daily basis to operate a firm identifying assets that produce value in excess of the cost to acquire those assets evaluating the size and timing of future cash flows from a project evaluating the…show more content…
If the interest rate on this investment is eight percent, what is the approximate current value of these future payments? (Points : 3) $93,000 $53,500 $84,300 $52,000 12. (TCO 3) Your neighbor just received a credit offer in an e-mail. The company is offering him $6,000 at 12.8 percent interest. The monthly payment is only $110. If he accepts this offer, how long will it take him to pay off the loan? (Points : 3) 81.00 months 81.50 months 83 months 82.17 months 90.70 months 13. (TCO 3) Fine Oak Woodworks is considering a project that has cash flows of $5,000, $3,000, and $8,000 for the next three years. If the appropriate discount rate of this project is 10 percent, which of the following statements is true? (Points : 3) The current value of the project’s inflows is $16,000 The approximate current value of the project’s inflows is $13,000 The current value of the project’s inflows is somewhere in between $14,000 and $16,000 The project should be rejected because its present value is negative 14. (TCO 4) You are considering two investments. Investment I, is in a software company and Investment II, is an engineering company. The investments offer the following cash flows: Year Software Company Engineering Company 1 $5,000 $15,000 2

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