UCF FIN 3403

Last year, your company had sales of $3.6 million, cost of goods sold of $2.3 million and operating expenses amounting to $840,000. The firm had $114,000 in depreciation expense. In addition, the firm paid 8% interest on $625,000 in bonds, received $30,00

$102,200

Given an anticipated inflation premium of 1.35% and a nominal rate of interest of 5.40%, what is the real interest rate? Round your answer to 4 decimal places.

4.00%

Given an anticipated inflation premium of 1.40% and a real rate of interest of 4.14%, what is the nominal interest rate? Round your answer to 4 decimal places.

5.60%

Which of the following best describes the goal of the firm?

Maximizing the value of the firm's equity

Last year, California Sushi and Such (CSS) had sales of $65 million. The firm's operating expenses amounted to $20 million and costs of goods sold totaled $15 million. In addition, CSS received $80,000 in dividend income, and paid $300,000 in dividends to

$6,570,900

Which of the following are tax deductible expenses for a corporation?

interest paid on debt

Net operating losses may be _______.

carried back 2 years or carried forward up to 20 years

What is the tax liability for a corporation with $13,100,000 in taxable income?

$4,485,000

What is the tax liability for a corporation with $13,600,000 in taxable income?

$4,660,000

The yield curve is typically _______.

upward sloping

To raise $5 million, Southeastern Corporation decides to issue bonds. If Southeastern does not register the bonds with the SEC and then sells the entire bond issue to Metropolitan Life Insurance Company, this issue is called a(n):

private placement

If a new security issue is marketed to a definite and select group of investors (such as current stockholders, employees or customers) the issue is called:

a privileged subscription

The least liquid current asset is _______.

inventory

The true owners of a corporation are the _______.

stockholders

Cash available from operations after the firm pays for investments (in operating working capital and fixed assets) is called:

free cash flow

If Electro Corporation sells a $20 million stock issue to an investment banking firm such as Merrill Lynch, this transaction takes place in:

the primary capital market.

Of the legal forms of organizations discussed in chapter 1, which form of organization has the advantage of limited liability for all owners?

corporation

If you sell 100 shares of General Electric common stock, this transaction takes place in:

the secondary capital market.

Suppose your firm had the following taxable income amounts:
2005 ($2 million) operating loss
2006 ($2 million) operating loss
2007 ($2 million) operating loss
2008 $10 million
After you "carry forward" the operating losses, what is the effective taxable i

$4 million

Since there is a virtual certainty that the U.S. government will pay interest on Treasury securities and will redeem them at face value when they mature, Treasury securities are free of any _________ risk.

default

Suppose your firm had the following taxable income amounts:
2005 $2 million
2006 $2 million
2007 $2 million
2008 ($5 million) operating loss
After you "carry back" the operating loss, what is the effective taxable income for 2007?

$0

(Brain teaser) In a brilliant move to improve its financial strength, your company increased its debt ratio to 60% and interest expense to $15,000 per year. Sales should remain unchanged at $200,000 with an EBIT of $27,000. If your firm's total assets tur

45.0%