• +44-190-022-0819 +44-190-022-0819
  • +1-248-268-9041 +1-248-268-9041
  • +61288800241 +61288800241


Search your solution from list of 1000+ questions


Product code: Accounts-AW355


1.     Who has the ultimate control over a corporation?

a. shareholders            b. chief executive officer        c. chairman of the board         d. board of directors  

2.     An agency problem is most apt to exist in which one of the following situations?

                     a. an employee asks for a raise and is denied

                     b. a management decision increases the market value of the firm’s stock

                     c. a board member resigns for personal reasons

                     d. a firm’s board decides to increase management bonuses and forego the normal stock dividend

3.     The credit default swap (CDS) spread on ABC Corp is 200 basis points. What annual payment does a buyer of credit protection have to pay to insure $1 million of ABC Corp bonds?

a. $200,000.

b. $20,000.

   c. $10,000.

   d. nothing.

4.            (continued from 3) In the event of default, the recovery rate is 50%. If investors are risk-neutral, what

                     is the  probability of default per year?

                     a. 1%

                     b. 10%

                     c. 4%

                     d. 8%

5.            Redding Industrial Supply had common stock of $6,800 and retained earnings of $4,925 at the beginning of the year. At the end of the year, the common stock balance is $7,000 and the retained earnings account balance is $5,498. The net income for the year is $938. What is the  retention ratio? (Hint Retention Ratio = Addition to Retained Earnings/Net Income)

        a. 17.59 percent   b. 38.91 percent                      c. 61.09 percent                       d. 82.41 percent


6.            A firm has sales of $26,800, depreciation of $2,200, interest expense of $330, cost of goods sold of $14,970, other costs of $5,800, and a tax rate of 34 percent. What is the firm’s profit margin?

a. 7.79 percent b. 7.87 percent                        c. 8.08 percent             d. 8.62 percent

7.            A firm has sales of $46,700 and inventory of $5,600.  Cost of goods sold is 62 percent of sales and depreciation is 8 percent of sales. What is this firm’s inventory turnover ratio? (Inventory turnover=Cost of Goods Sold/Inventory)

a. 5.17          b. 4. 3                 c. 17                d. -4


8.     You currently have $7,200 in your investment account. You can earn an average rate of return of      11.7 percent per year. How long will you have to wait until your account is worth $50,000?

a. 9.47 years b. 11.28 years                 c. 14.67 years              d. 17.51 years

9.     Bridgewater Bank pays 4 percent simple interest on its savings accounts. Tidewater Bank pays 4 percent interest, compounded annually on its savings accounts. Four years ago, Lew invested $3,000 in each bank. What is the difference, if any, in his account balances today?

a.  $17.16        b. $29.58                     c. $34.06                     d. $35.42


10.   Steve invested $2,500 this morning with The Branch Bank at 7 percent interest, compounded annually. After making this investment, he discovered that he could have invested his money with Tyler Bank and earned 7 percent interest, compounded quarterly. How much additional interest could Steve have earned over the next 5 years if he had invested with the Tyler Bank instead of with The Branch Bank?

a.     $30.57     b. $48.11                     c. $52.60                     d. $57.20

II. (15 points) 

  1. You want to endow a scholarship that will pay $10,000 per year forever, starting one year from now. If the school’s endowment discount rate is 7%, what amount must you donate to endow the scholarship? (10 points)
  2. How would your answer change if you endow the scholarship now, but it makes the first award to a student 10 years from today? (5 points)


III. (35 points)

You are trying to decide how much to save for retirement. You have determined that you can save $5,000 per year with the first investment made 1 year from now. You think that you can earn 10% annually on your investments and you plan to retire in 43 years, immediately after making your last $5,000 investment.

  1.    How much will you have in your retirement account on the day you retire? (10 points)
  2.    If, instead of investing $5,000 per year, you wanted to make one lump-sum investment today for your retirement that will result in the same retirement saving, how much would that lump-sum need to be? (10 points)
  3.    If you hope to live for 20 years in retirement, how much can you withdraw every year in retirement (starting one year after retirement) so that you will just exhaust your savings with the 20th withdrawal (assume your savings will continue to earn 10% in your retirement) (10 points) 
  4.    If, instead, you decide to withdraw $300,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it take until you exhaust your savings? (5 points)


IV. (20 points, 2.5 points for each question).    3103 Printing, Inc., had sales totaling $40,000,000 in fiscal year 2014. Some ratios for the company are listed below. Use this information to determine the dollar values of various income statement and balance sheet accounts as requested.


3103 Printing, Inc.

Year Ended December 31, 2014



Gross profit margin


Operating profit margin


Net profit margin


Return on total assets (ROA)


Return on equity (ROE)


Total asset turnover


Average collection period

62.2 days



Calculate values for the following:


  1. Gross profits


  1. Cost of goods sold


  1. Operating profits


  1. Operating expenses


  1. Earnings available for common stockholders


  1. Total assets


  1. Total common stock equity


  1. Accounts receivable


Extra Credit (5 points).  You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage at a fixed interest rate of 7% per year. You have determined that you can only afford annual mortgage payments of $23,500. The bank agrees to allow you pay this amount each year, yet still borrow $300,000. However, at the end of the mortgage period (in 30 years), you must make a balloon payment; that is you must repay the remaining balance on the mortgage. How much will this balloon payment be?







































Download Questions

Product code: Accounts-AW355

Related Questions in (Accounting)


Solution: The Journal of Helene Berr and Rue Ordener, Rue Labat 2 evidences that prove the difficulty and destructiveness that the people had to face in those four years. As mentioned by Berr (2009, p.23), in h ...


Solution: Employee communication highlights the sharing of ideas and information. In this competitive business world, information exchange is essential among employees to develop team performance effectively. m ...


Solution: As per Section 1 of the Thirteenth year plan describes about China’s two key objectives that will be accomplished if the National People’s Congress or the standing committee of this party passes t ...


Solution: (Feldman 2005) reference information extraction to be one of the weightiest pre-processing method that escalates the text mining potential significantly. Pre-processing is an essential part in informa ...


Solution: The pro forma income statement represents a trending statement that includes the probable net income value for the company considering the current growth and decline rates valid throughout the period ...


Solution: Mode is defined as the value which occurs more frequently in the data set. The mode for non-business is 82 while for business is only 59. P value can be calculated from z table . As per z table p valu ...


Solution: ABC assumes that there are different activities involved in different processes that cause costs andthe product, services, and customers are reasons for those activities. The UK customer segment is br ...


Solution: Residual earnings valuation method is used to calculate the intrinsic value of the stock based on the expected residual income of the company in the coming years. The residual income is discounted bac ...