Strayer fin 534 finals part 1 solutions (100% score)

1.      Which of the following statements is CORRECT

2.      Which of the following statements is CORRECT

3.      Other things held constant, the value of an option depends on the stock’s price, the risk-free rate, and the

4.      Which of the following statements is CORRECT

5.      An option that gives the holder the right to sell a stock at a specified price at some future time is

6.      Braddock Construction Co.’s stock is trading at $20 a share. Call options that expire in three months with a strike price of $20 sell for $1.50. Which of the following will occur if the stock price increases 10%, to $22 a share

7.      With its current financial policies, Flagstaff Inc. will have to issue new common stock to fund its capital budget. Since new stock has a higher cost than reinvested earnings, Flagstaff would like to avoid issuing new stock. Which of the following actions would REDUCE its need to issue new common stock

8.      Which of the following statements is CORRECT

9.      To help them estimate the company’s cost of capital, Smithco has hired you as a consultant. You have been provided with the following data: D1 = $1.45; P0 = $22.50; and g = 6.50% (constant). Based on the DCF approach, what is the cost of common from reinvested earnings

10.  Which of the following statements is CORRECT

11.  For a typical firm, which of the following sequences is CORRECT? All rates are after taxes, and assume that the firm operates at its target capital structure

12.  Which of the following statements is CORRECT

13.  Which of the following statements is CORRECT

14.  Which of the following statements is CORRECT

15.  Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows

16.  Which of the following statements is CORRECT

17.  Which of the following statements is CORRECT

18.  Which of the following statements is CORRECT

19.  Which of the following procedures best accounts for the relative risk of a proposed project

20.  Which of the following factors should be included in the cash flows used to estimate a project’s NPV

21.  To increase productive capacity, a company is considering a proposed new plant. Which of the following statements is CORRECT

22.  Which of the following rules is CORRECT for capital budgeting analysis

23.  When evaluating a new project, firms should include in the projected cash flows all of the following EXCEPT

24.  Which of the following statements is CORRECT

25.  Which of the following assumptions is embodied in the AFN equation

26.  The capital intensity ratio is generally defined as follows

27.  Last year National Aeronautics had a FA/Sales ratio of 40%, comprised of $250 million of sales and $100 million of fixed assets. However, its fixed assets were used at only 75% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity. What target FA/Sales ratio should the company set

28.  Which of the following statements is CORRECT

29.  The Besnier Company had $250 million of sales last year, and it had $75 million of fixed assets that were being operated at 80% of capacity. In millions, how large could sales have been if the company had operated at full capacity

30.  Which of the following is NOT one of the steps taken in the financial planning process